Growth in demand for steel may be around 5%: JSW Steel

CNBC-TV18’s Nigel D'souza is in conversation with JSW Steel's Joint MD & Group CFO Seshagiri Rao on the sidelines of the Centrum Symposium on steel.

Internationally steel prices went up further therefore there is a scope for Indian steel prices to go up, he said.

Considering the overall demand situation and the outlook, I expect steel prices to remain buoyant in international market and in line with that domestic steel prices will fluctuate, he added.

Generally the growth in demand in the second half of the year is much better. We hope to see the repeat of same thing so the growth in demand for steel will be around 5 percent, said Rao.

We wanted to be a 40 million tonne steel company by 2025, we are working in that direction. It could be by way of inorganic or organic growth, he further mentioned.

Below is the verbatim transcript of the interview.

Q: We are unfolding the 300 million tonne story. Let us talk about steel prices and demand. the last time we spoke a month ago, you told us that steel prices domestically were at a discount in comparison to global steel prices, from there global steel prices took off, what is the current difference between domestic steel prices and international prices and also give us a sense of demand, there is so much of euphoria that is playing out is demand picking up?

A: Steel prices are concerned, internationally prices went up further. Therefore there is a scope for Indian steel prices to go up so the discount which we talked about in the month of July when we announced our results, it has been little bit widened than it used to be. Prices went up quite substantially in the last few months where the iron ore prices went up, coking coal prices went up and in line with that even steel prices went up. Even though we have seen some small correction because of the dollar strength today in market, considering the overall demand situation and the outlook, I expect steel prices remains buoyant in the international market in line with that the domestic steel prices will fluctuate.

Q: Demand you are expecting it to pick up from here and what is the number currently? Are domestic prices at a 7-8 percent discount in comparison to global steel prices?

A: Yes, it is in that range.

Q: Demand should pick up in the second half of this year, that is what you are baking in. till now we are 4 percent demand growth, do you see that number move up maybe to 5-6 percent?

A: Last year we have grown to 3.3 percent so in this year we expect it will be in the range of 5 percent. So we are already seeing an acceleration over last year, 4.4 percent growth is in demand but generally the growth in demand in the second half of the financial year will be much better off because the monsoon is over. So same thing we hope in this year will repeat. So it will be in the range of around 5 percent.

Q: Bankers have been getting a plenty of interest with regard to those steel assets that are on the block or maybe they are going through the entire process of re-strengthening themselves, which is the best fit for JSW Steel? Bhushan Steel, Essar Steel and if you are looking at those assets, what would be the kind of haircut you are looking at as well?

A: We don’t want to comment on any specific asset but as JSW Steel is concerned, we wanted to be a 40 million tonne steel company by 2025. So we are working in that direction. So it could be by way of inorganic growth or organic growth. On organic growth side, we have already announced a 5 million tonne expansion of Dolvi, so in the next two to two and a half years’ time we will be 23 million tonne capacity. But at the same time we have been evaluating the inorganic opportunities in India. So we will not be able to comment today on X or Y or Z target.