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From being a drag on the group, JSW group’s steel business in the US has turned around to become EBITDA positive. The company, which has invested $130 million in the US over the last year, will invest another $160 million to ramp up operations.
Parth Jindal, who heads overseas operations of the Group, said “The US business has been a drag on overall business and questions have been asked as to why the Group remains invested. I can tell you now that this year we have turned around the US operations,” he told BusinessLine adding that the focus is now to increase the capacity utilisation in US plants from 40 per cent to 80 per cent.
JSW operates two manufacturing units in US at Baytown, Texas, and the second one at Mingo Junction, Ohio.
On Tuesday, the Ohio unit signed a long-term agreement with Allegheny Technologies Inc for conversion of carbon steel slabs manufactured at its Mingo Junction into hot rolled coils at ATI’s Hot Rolling and Processing Facility in Brackenridge, PA.
ATI is expected to hot-roll a significant percentage of carbon steel slabs produced by JSW Steel USA.
“JSW USA has been on a path of modernisation for the last 24 months, from our plate mill in Baytown, TX to our EAF in Mingo Junction, OH our idea has been to provide the best in class ‘melted & manufactured’ products (Slabs, HRC, Plate & Pipe) to our valued customers in the USA. Our agreement with ATI is further testimony to our vision of being a premium supplier of steel products in the market,” said Jindal, Director of JSW USA.
“The US economy is picking up with the new administration announcing big-ticket infrastructure projects. The vaccination has also been rolled out to 60 per cent of the population so overall things are looking up in the US,” he added.
Covid impact on India biz
When asked about the impact of the pandemic on the company’s India business, Jindal said the second wave has had some impact but the demand is expected to pick up later this year by the second or third quarter.
Meanwhile, the company is relying on exports. Exports account for about 20 per cent of JSW’s India sales which can be ramped up to 40 per cent, if required.
Chinese supplies & scrappage
Jindal said that the group has completely cut off Chinese supply barring two products which are available only in that country. He said suppliers to Group who more than 20 per cent of their sourcing from China are also banned unless and until they prove that învestments have been made to reduce their imports from China.
On the issue of recyling steel through scrap, Jindal said there was a need for policy support on recycling. The company is currently importing scrap because India does not have an organised recycling base. “The scrappage policy announced by the Government will have to be implemented well and then we can look at setting up an electric arc furnace,” he said.
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