JSW Steel, currently running at a capacity of 50-60 per cent, is in talks with its long-term customers to raise steel prices in the range of three-four per cent. The price increase for long-term contracts are under various stages of discussions with customers. Its monthly prices have risen by three-four per cent in October. The quarterly prices, depending on the product, segment, will be finalised soon. The long-term contracts are typically with auto, consumer durable companies, etc. Although customer sentiments are not as buoyant as the companies expected, JSW Steel is going ahead with the price hike because of the increase in cost of its steel production and the iron ore issue in Bellary. The company's margins dropped by 2.5 per cent last quarter and it is trying to make up with the price increase. Its profits dropped by over 71 per cent and the company lost nearly half a million tonnes of steel production due to non-availability of iron ore.
The steelmaker is meeting long-term customers’ steel demands by cutting down on its spot sales and liquidating inventory. The production of semi-steel has been hit the most, followed by long- and hot-rolled steel. The company has aggressively reduced its inventories to meet the shortfall of production. Typically, steelmakers like to have inventory levels of around two months. It has reduced inventories to meet customers’ demands. The inventory at the end of the second quarter was around 400,000 tonnes. It is roughly an inventory of 15-20 days. The company has strategically reduced the inventory, levels to feed customers requirements during the shortfall.
Company Name | CMP |
---|---|
Tata Steel | 142.95 |
JSW Steel | 944.50 |
SAIL | 119.70 |
Jindal Stainless | 721.40 |
Jindal Saw | 305.15 |
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