Steel Authority of India Ltd. expects imported coking coal costs to decline by Rs 1,000-2,000 a tonne in the second quarter as global prices soften, management said during its earnings call after reporting first-quarter results.
The company said lower raw material costs are expected to coincide with weaker steel prices during the monsoon quarter. Management also retained its full-year production and capital expenditure guidance, saying first-quarter output was affected by planned maintenance that has now been completed.
The comments came after SAIL reported lower production in the June quarter because it advanced capital repairs at three plants. Management said production would recover over the remaining quarters, while lower coking coal costs begin flowing through the cost base.
Coal Costs
Chairman and Managing Director Ashok Kumar Panda said imported coking coal prices have started easing and the benefit will be reflected in the current quarter.
"It will reduce because now the price is softening... there will be reduction of around Rs 1,000 to Rs 2,000," Panda said.
Management said the average net sales realisation in July stood at around Rs 55,600 a tonne compared with about Rs 57,100 a tonne in the June quarter. Flat steel realisations were about Rs 56,900 a tonne, while long products were around Rs 54,200 a tonne.
Panda said long steel prices had started recovering after recent declines.
"Long products had corrected by around Rs 3,000. Now it has started improving... we are expecting a recovery of around Rs 500 to Rs 2,000," he said.
Production Plan
SAIL said it remains on course to meet its production target for the financial year despite the weaker first quarter.
Panda said the company deliberately advanced capital repairs at the IISCO Steel Plant, Durgapur Steel Plant and Bokaro Steel Plant, reducing production in the June quarter.
"That was by design. So in Q2, Q3 and Q4 the production volumes will be more than that of last year. On the yearly basis, there is expected to be growth as compared to FY26," he said.
The company spent Rs 2,575 crore on capital expenditure in the first quarter against a target of Rs 2,306 crore and retained its full-year capital expenditure target of Rs 15,000 crore.
Mine Earnings
Management also said surplus iron ore sales made a larger contribution during the quarter.
SAIL sold 1.1 million tonnes of surplus iron ore in the June quarter, up from about 0.31 million tonnes a year earlier. Revenue from those sales rose to Rs 574 crore from Rs 157 crore, while the business contributed about Rs 150 crore to EBITDA, according to management.
Panda said SAIL is targeting around 8 million tonnes of surplus iron ore sales this financial year, compared with roughly 3.5 million tonnes last year, although logistics constraints continue. He said demand for sub-grade iron ore fines remains strong.
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