By Amriteshwar Mathur
The steel industry has been facing multiple headwinds with surging steel imports from south-east Asian nations over the past few quarters along with sluggish growth trends in the domestic economy, given a slowdown in government spending on infrastructure projects.
It’s no surprise that steel companies reported near 8-9 % y-o-y fall in realisations on a per tonne basis in the December 2024 quarter along with a sharp drop in net profit in the quarter under review.
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And nervous investors on Dalal Street have heavily sold stocks in this sector – the government-controlled SAIL ended Wednesday’s trade at Rs 104.4, and not too far from its 52-week of Rs 99.55 that was reached on 13 January 2025. In addition, Tata Steel ended Wednesday’s trade at Rs 130.8, while its 52-week low of Rs 122.6 was also on 13 January 2025.
Brittle strength of steel sector
Media reports have pointed out to Chinese steel imports into the country that grew nearly 23 % on a y-o-y basis to 1.96 million tonnes during April to November of the current financial year. In addition, steel imports from Japan more than doubled to 1.4 million tonnes during this period.
The above development comes at a time when the economy has shown signs of losing pace – the RBI had downgraded real GDP growth forecast to 6.6 % for FY 25 from the previous forecast of 7.2 per cent in its quarterly monetary policy review meeting in early December 2024.
It’s no surprise that steel realisations for leading players like JSW Steel, realisations declined nearly 8.9 % y-o-y to Rs 56,885 per tonne in the third quarter of FY 25 in its Indian operations. JSW Steel on a standalone basis, which includes its Indian steel production, sold 5.59 million tonnes of steel in the December 2024 quarter, a rise of 7 % on a y-o-y basis.
In its quarterly results press release JSW Steel highlighted that total steel consumption in the country grew by 6.8% y-o-y to 38.46 million tonnes in the December 2024 quarter, witnessing a slowdown compared to the 13.6 per cent growth in the first half of FY 25.
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