Sales at Jindal Steel & Power Ltd. and Tata Steel Ltd. was higher than their peers in the quarter ended September, aided by inventory liquidation and higher exports.
However, the effects of rising raw material costs may start reflecting on steelmakers' books soon. Edelweiss Securities expects their earnings momentum to stall amid:
Higher prices of coking coal and consumables. Coking coal turned expensive by $25-30 per tonne over the preceding quarter.
Subdued domestic demand leading to increased dependence on exports, which impacts realisation.
Steel prices have either remained flat or fallen, particularly for longs.
Here's how the steelmakers fared on production and sales in the second quarter.
Production
JSPL's production in the three months through September fell sequentially, while Tata Steel's rose. Jindal Steel Ltd.'s production, however, remained largely unchanged over the preceding quarter owing to lower utilisation levels.
JSPL said in an exchange filing its production was impacted as it diverted oxygen from its facilities to saving lives, when the second wave of the Covid-19 pandemic caused an acute shortage of the gas across India.
Jindal Steel undertook planned shutdown at its plant in Vijayanagar in Karnataka to repair two convertors. The blast furnace at its plant in Salem, Tamil Nadu, went in for an annual shutdown for maintenance work of its blast furnaces.
Sales
JSPL outperformed peers on quarterly sales, both on sequential and annual basis, in the second quarter despite its lower production. Sales rose past 2 million tonnes for the first time, the company said in a statement.
Exports boosted sales with its share rising to more than 40% in the second quarter, from 34% in the preceding quarter and 38% in the same period a year ago.
JSW Steel's production was amid plant maintenance works. Tata Steel's deliveries fell year-on-year even as it rose sequentially. Sales increased 12% quarter-on-quarter even amid seasonal weakness. The company's inventory levels continued to fall, with sales volumes surpassing production for the third consecutive month in September.
