India's JSW Steel Betting on Solid Steel Demand in 2012-13

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JSW Steel, India’s largest private sector steel manufacturer in terms of installed capacity, plans to raise crude steel production 20 percent to 22 percent — to about 9 million metric tons — during 2012-13, reports Business Standard.

According to the report, for the year ended March 31, the company has recorded steel production of 7.43 million tons and 7.82 million tons of sales, against a revised guidance of 7.5 million tons and 7.8 million tons, respectively. The company has set a guidance of producing 8.5 million tons and selling 9 million tons of steel in 2012-13.

The company’s performance stands despite severe iron ore shortages in the south Indian state of Karnataka. The iron ore shortage happened mainly because last year the Supreme Court of India banned illegal mining activities in Karnataka.

However, even though the ban has been partially lifted since last April, the company is still facing shortages of its key raw material, iron ore.

The Court has allowed Category “A” mines, or mines spread over 50 hectares or more, in the Bellari district in southern Karnataka to restart operations after environmental clearance.

JSW Steel hopes to enhance production after the resumption of mining in Karnataka in select category A and B mines.

The Court had earlier granted permission to state-run National Mineral Development Corporation (NMDC) to mine up to a million tons of iron ore per month.

Meanwhile, according to a statement issued by the company, JSW Steel reported 27 percent growth in crude steel production in Q1 FY 2013 compared to the corresponding period of last fiscal year.

The company says that the Vijayanagar works could operate at about 80% capacity utilization during Q1 FY13 due to constraints in availability and quality of iron ore in e-auctions in Karnataka.

During recent times, global steel production has shown poor performance. Reports suggest that global crude steel production remains near flat in May even as production in India grew 4 percent and in China by 2.5 percent.

According to the World Steel Association (WSA), the world produced 131 million tons in May 2012, an increase of 0.7 percent compared to May 2011. The association based its figures on data provided by 62 countries reporting to it.

According to WSA figures, India’s production in the month stood at 6.2 million tons against 5.9 million tons in May last year. China’s crude steel production was 61.2 Million tons, an increase of 2.5 percent compared to May 2011.

Japan produced 9.2 million tons of crude steel in May 2012, up by 2 percent compared to the same month last year. South Korea’s crude steel production for May 2012 was 6 million tons, up 2 percent compared to May 2011.

JSW Steel has one of the largest galvanizing and color-coating production capacities in the country and is the largest exporter of galvanized products with presence in over 100 countries across five continents.

TC Malhotra contributes to MetalMiner from New Delhi. 

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