SAIL Forecasts ₹1,000 Drop in Steel Prices Amidst Low-Priced Imports

According to a senior executive of the Steel Authority of India Limited (SAIL), the company’s blended realisations could decline further sequentially by ~₹1,000 per tonne this quarter due to continued pressure from low-priced Chinese steel imports.

For the June quarter, net sales realisation, or blended steel prices, were ₹53,700 per tonne, down ₹800 from the March quarter.

Despite recent corrections in coking coal prices, SAIL expects its cost for the material to remain stable due to its higher-than-average coking coal stock from long-term agreements with suppliers.

Anil Kumar Tulsiani, Director (Finance), mentioned that the blended cost of coking coal was ₹22,000 per tonne in the June quarter and is expected to stay around this level. In contrast, other steelmakers are predicting lower coking coal costs in the September quarter due to global price trends.

The company anticipates its coal inventory will decrease over the coming months, which will help release some working capital. During the quarter, debt increased by over ₹5,000 crore due to higher coking coal stock and an additional ₹1,000 crore in steel inventory.

SAIL’s steel inventory stood at 1.84 million tonnes for the quarter. The company, which currently has a production capacity of 20 million tonnes, plans to expand by an additional 15 million tonnes over the next 5-6 years, with a capital expenditure of ₹1,00,000 – ₹,110,000 crore. This will begin with debottlenecking existing plants, expected to add 3 million tonnes of capacity at a cost of ₹10,000 – ₹11,000 crore over the next three to four years. Additionally, SAIL plans a ₹37,000 crore investment to increase capacity by 4 million tonnes at its IISCO steel plant.

For the current fiscal year, SAIL expects to spend ₹6,300 crore on capital expenditure, with a planned expenditure of ₹7,000 crore in the following year, after which capex is projected to increase significantly. In the June quarter alone, SAIL spent ₹986 crore on capex. The company targets a production of 20.87 million tonnes and a sales volume of 19.26 million tonnes for the current fiscal year.

On August 16, 2024, the share price of Steel Authority of India Ltd opened at ₹127.77, touching the day’s high at ₹128.68, as of 10:59 AM on the NSE.

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