By Debarati Roy
March 16 (Bloomberg) -- Steel Authority of India Ltd., the nation’s second-biggest producer, and JSW Steel Ltd. forecast higher sales as a $14 billion federal program to build houses and roads revives demand.
JSW will run its mills at full capacity as orders will probably double to 600,000 metric tons this month from a year ago, JSW Vice Chairman and Managing Director Sajjan Jindal said at a conference in Hyderabad today. Steel Authority’s sales in the January to March quarter may beat the 3 million tons produced a year earlier, Finance Director Soiles Bhattacharya said.
Prime Minister Manmohan Singh’s government has approved 700 billion rupees ($14 billion) of projects since August to build roads, ports and bridges. State spending will help the Indian steelmakers weather the global recession that’s curbing orders at ArcelorMittal and Tata Steel Ltd.’s Corus unit.
“Demand is slowly picking up,” said Bharath S., an analyst at Sundaram BNP Paribas Mutual Fund. “With interest rates coming down, people are again starting to build houses and look at buying cars.”
In the next fiscal year, the Indian government plans to spend $7.95 billion under the Bharat Nirman program to build rural infrastructure, including roads, and networks of telephones, electricity and irrigation.
Steel Authority shares rose 1.8 percent to 83.5 rupees in Mumbai today. JSW gained 1.7 percent to 184.50 rupees, while Tata Steel climbed 1.7 percent to 169.75 rupees. The benchmark Sensitive Index rose 2.1 percent.
Retail Shops
Mumbai-based JSW, India’s third-biggest producer, plans to build a nationwide network of sales outlets with as many as 600 branches, Jindal said today. Earlier this month, the company said it expects sales to rise as much 60 percent this quarter from the previous three months.
New Delhi-based Steel Authority, which sold 12.3 million tons in the last fiscal year, said earlier sales last month rose 9 percent to 1.17 million tons from a year ago. Tata Steel said March 6 sales in India, excluding its Corus unit, surged 47 percent in February.
“Demand is picking up because people think prices have bottomed,” Steel Authority’s Bhattacharya said in an interview, while attending the industry conference in Hyderabad.
Sales should be sustained for at least the next two quarters, aided mainly by rural construction, Jindal told reporters at the conference today. JSW completed expanding annual capacity to 6.8 million tons last month from 3.8 million tons.
Coal Rates
Long-term annual coking coal rates starting April are likely to drop to less than $100 a ton, Jindal said. JSW in January slashed coking coal rates paid to Rio Tinto Group by 43 percent to $175 a ton for the last three months of an annual contract ending March 31.
Tata Steel, the nation’s biggest producer after purchasing U.K.-based Corus, also renegotiated lower prices, it said in January, without providing details.
Steel Authority has yet to renegotiate coking coal prices with suppliers, Steel Secretary Pramod Rastogi said today. The company pays $305 a metric ton for coking coal it buys from international miners such as BHP Billiton Ltd.
Luxembourg-based ArcelorMittal, the world’s biggest steelmaker, has lowered output more than 30 percent as the global recession curbs orders for cars, houses and electronic goods. Tata Steel’s Corus unit slashed production because of the slowdown in Europe.
Global crude steel output fell 24 percent in January from a year earlier, the World Steel Association said Feb. 20.
To contact the reporter for this story: Debarati Roy in Mumbai at droy5@bloomberg.net
Posts
No comments:
Post a Comment