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ICICI Direct Report
With the opening up of the economy, domestic steel demand improved notably in Q2 FY21 compared to Q1 FY21.
The improvement in demand aided capacity utilisation of domestic steel players. JSW Steel Ltd. (Indian operations) reported capacity utilisation of 86% in Q2 FY21, notably higher than 66% in Q1 FY21.
Tata Steel Ltd. (Indian operations) reported capacity utilisation of approximately 93% in Q2 FY21, notably higher than approximately 61% in Q1 FY21.
Furthermore, aided by improvement in global steel prices, domestic steel prices increased 5% QoQ to Rs 38,900/tonne.
Sequential higher steel prices coupled with improvement in product mix (lower share of exports), we expect realisations of domestic steel companies to increase by approximately Rs 3,500/tonne in Q2 FY21 compared to Q1 FY21.
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