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With the rise in steel imports (up 53 per cent year-on-year) weighing down domestic steel prices, JSW Steel posted net loss of ₹107 crore for the April- June 2015 quarter. Sales revenue contracted 13 per cent to ₹11,382 crore over the year-ago period.
This is the third consecutive quarter of falling profits and revenues for JSW Steel. Weak realisations amid the glut in the global steel industry and costly iron ore imports have hurt the company in recent quarters. In the latest June quarter though, there has been relief on the cost front, thanks to cheaper domestic iron ore and savings on logistics. But with no let up in cheap steel imports from countries such as China, Japan, Korea and Russia, realisations remained under pressure. This is reflected in the deterioration in the company’s operating profit margin (standalone) to 15 per cent in the June 2015 quarter from 21 per cent in the year-ago period.
What’s expected In the coming quarters, there should be further savings in cost as JSW Steel liquidates the existing imported iron ore inventory and relies more on cheaper domestic sources. Besides, the company’s plan to integrate backwards by bidding for category C iron ore mines in Karnataka, as and when they are put up for auction, should also stand it in good stead.
Excess supply in the global steel industry would, however, continue to act as a drag on steel prices. Prices of hot rolled steel coils exports from China have fallen 21 per cent so far since April.
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