India’s largest steelmaker is better placed then peers to meet rising demand as the nation has entered the seasonally strong quarter.
Steel mills ramped up production as the economic recovery after the Covid-19 lockdown drove demand for the alloy used to make everything from bridges and buildings to cars. But growth in output is likely to be muted in the next few quarters. That’s because companies have nearly exhausted capacity.
Most Indian steelmakers have been operating at 97-98% utilisation levels and have hardly any incremental capacities coming on stream, except for JSW Steel Ltd., said Rakesh Arora, managing partner at Go India Advisors, told BloombergQuint.
JSW Steel is on an expansion spree and commenced production of hot rolled plates from the new mill in Dolvi, Maharashtra with a capacity of 5 million tonnes per year on March 31.
That comes before the seasonally strong first quarter of fiscal 2022 when construction picks up before the monsoon sets in. Steel consumption in the first half is expected to be strong from both export markets and within India as the GDP is estimated to grow 10-12% in FY22.
Demand somewhat tapered in February before resuming to normalcy in March, said Amit Dixit, assistant vice president-research at Edelweiss Securities. But the numbers were more or less in line with estimates as most of the companies continue to export, he said.
Export realisations, according Dixit, have been 8-9% higher than domestic amid higher demand from Southeast Asian countries.