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Steelmakers such as SAIL and JSW Steel see a rebound in demand in the January-March quarter on rising offtake for long-products, used mainly in construction. On Tuesday, though SAIL raised the base price for three products, this will not be passed on to the consumer.
“The demand is picking up and it is going to be a brisk quarter,” the SAIL Chairman, Mr C.S. Verma, told Business Line .
The current quarter also happens to be the last quarter of the terminal year of the 11th Five-Year Plan. As a result, there is a rush to meet targets on various Government projects, thereby triggering an increased demand, Mr Verma said.
SAIL had increased the prices of its entire range of products by Rs 1,000 a tonne in January, the second such increase since October. The country's largest steel producer expects prices to remain firm. On Tuesday, SAIL increased the ex-factory base prices for three of its long products – the TMT bars, angles and channels by Rs 2,000 to Rs 3,000 a tonne. However, SAIL officials clarified that the selling prices for end-users in February remain unchanged.
SAIL will declare its December quarter results on February 13, while another player Tata Steel will announce its numbers on February 9.
“The sentiment is definitely better than the October-December quarter,” said Mr Jayant Acharya, Director Commercial and Marketing at JSW Steel Ltd. Like SAIL, JSW is also witnessing an improved offtake in long products. The company reported a 20 per cent rise in sales in the October-December quarter.
The improved offtake is mainly from the construction segment, while the demand for flat products used by auto and consumer durable makers continues to be sluggish.
In the current financial year, steel companies have witnessed a muted demand on sluggish offtake from across the board. The consumption grew by a mere 1.8 per cent in the first half, while it has started picking up since December. The January-March quarter, traditionally the strongest, seems to be promising.
According to the Joint Plant Committee estimates, consumption in the first nine months of current fiscal stood grew at 4.4 per cent to 50.8 million tonnes, while the production was up 7.5 per cent. The Steel Ministry expects consumption in the current fiscal to grow by 6 per cent.
“Demand has been robust in the current quarter,” said Mr Pankaj Gupta, General Manager Finance at APL Apollo, a steel tube maker. The rise in offtake is driven by the rush to complete tenders for Government projects before end-March. “As we have to close the orders within the quarter, the demand is automatically better,” he said.
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