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We hosted JSW Steel's management at our DB Access India Conference.
The key takeaways from the meeting are :
*Iron ore availability has improved significantly over the last six months.
JSW Steel has purchased c. 9m tonnes of iron ore, out of c.16 m tonnes
through e-auctions, and received c. 6m tonnes of ore till now.
*The company remains confident of meeting its full-year guidance of c.7.5m
tonnes of production in FY12.
*The steelmakers in Karnataka are keenly awaiting the next Supreme Court
hearing on the mining ban. The steelmakers expect a partial relaxation of
the mining ban, in line with the CEC recommendations. The CEC has recommended
resumption of mining in category-A iron ore mines, which are
legal mines without any violations. E-auction is likely to continue as the preferred
mode for the sale of ore to the steelmakers.
*Management remains optimistic on the steel demand-supply scenario in
India. It expects only a minor surplus in the domestic flat products market
with the commencement of 15-16m tonnes of capacity over the next two
to three years.
*The domestic steel demand has shown an uptick over the past couple of
months, allowing the company to increase prices of various steel products.
Long steel products are doing better than the flat products.
*Management indicated that the company has plans to spend c.US$3bn
over the FY12-14 period and US$0.8bn in FY12 for the capacity in various
expansion projects.
*The agreement to supply power at c.INR5/unit by JSW Energy to JSW
Ispat is likely to have a positive impact of INR500-700/MT on JSW Ispat's
EBITDA level.
*The progress on US coal assets is slow and mining contracts are yet to be
awarded. Mozambique coal mines are expected to start operation in another
four to five years.
*The company has to make a repayment of c.INR1.2-1.5bn every year excluding
FCCB obligations to the tune of c.USD319m which is likely to mature
in June 2012.
*The weighted average cost of JSW Steel is c.7-8% and 11-12% for JSW
Ispat.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We hosted JSW Steel's management at our DB Access India Conference.
The key takeaways from the meeting are :
*Iron ore availability has improved significantly over the last six months.
JSW Steel has purchased c. 9m tonnes of iron ore, out of c.16 m tonnes
through e-auctions, and received c. 6m tonnes of ore till now.
*The company remains confident of meeting its full-year guidance of c.7.5m
tonnes of production in FY12.
*The steelmakers in Karnataka are keenly awaiting the next Supreme Court
hearing on the mining ban. The steelmakers expect a partial relaxation of
the mining ban, in line with the CEC recommendations. The CEC has recommended
resumption of mining in category-A iron ore mines, which are
legal mines without any violations. E-auction is likely to continue as the preferred
mode for the sale of ore to the steelmakers.
*Management remains optimistic on the steel demand-supply scenario in
India. It expects only a minor surplus in the domestic flat products market
with the commencement of 15-16m tonnes of capacity over the next two
to three years.
*The domestic steel demand has shown an uptick over the past couple of
months, allowing the company to increase prices of various steel products.
Long steel products are doing better than the flat products.
*Management indicated that the company has plans to spend c.US$3bn
over the FY12-14 period and US$0.8bn in FY12 for the capacity in various
expansion projects.
*The agreement to supply power at c.INR5/unit by JSW Energy to JSW
Ispat is likely to have a positive impact of INR500-700/MT on JSW Ispat's
EBITDA level.
*The progress on US coal assets is slow and mining contracts are yet to be
awarded. Mozambique coal mines are expected to start operation in another
four to five years.
*The company has to make a repayment of c.INR1.2-1.5bn every year excluding
FCCB obligations to the tune of c.USD319m which is likely to mature
in June 2012.
*The weighted average cost of JSW Steel is c.7-8% and 11-12% for JSW
Ispat.
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