.jpg?downsize=773:435 "Shrinking Chinese Steel Exports To Aid HEG’s Margin")
Structural changes in the graphite industry, arising from developments in China, can boost HEG Ltd.'s margins, said Ravi Jhunjhunwala, chairman and managing director at HEG Ltd.
China shut down at least 120-140 million tonne of induction and mini-blast furnaces to crack down on polluting industries. This reduced China's capacity to export steel and prompted countries such as India, which were net importers , to step up domestic production.
China was exporting about 120 million tonnes of steel to 200 countries. That's now likely to drop somewhere in the region of 60-70 million tonnes. That 50 million tonnes which are not being exported is now being produced in countries which were importing.That has added to demand for electrodes.Ravi Jhunjhunwala, CMD, HEG
Besides, China's export of billets has also come down, prompting a similar rush to produce domestically.
Jhunjhunwala said, along with steel capacity, China has also closed down electrode capacities to the tune of 30-35 percent boosting domestic demand. Most of these capacities are “gone forever” as in the winter months, China is looking to implement another round of crackdown, he added.
To meet the “incremental demand”, HEG will have to operate at 80-85 percent capacity this year as compared to last year's 60-65 percent, Jhunjhunwala said.
HEG posted strong earnings this quarter as revenue rose 92 percent this quarter from a year ago period. The stock has risen 1,249.87 percent this year, as compared to 26.3 percent rise on the Sensex.
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