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JSW Steel Expects Long Road for Demand Revival

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JSW Steel Joint Managing Director & Group Chief Financial Officer Mr Seshagiri Rao said that JSW Steel will be able to address supply side issues including sourcing of raw materials, getting employees and contract workers to work by June but demand are not expected to revive anytime soon. He said, “We will reach complete normalcy by June end at the supply front. The demand side is not in our hands and we have to see how to sell. We don’t want to increase the inventory. The situation will not improve dramatically because of the three problems liquidity, labour and logistics. There is no credit flow from the banks to the industry. Getting workers is the second issue as the migrant workers went back to their hometowns. Logistics will be the third issue because of the shortage of trained manpower. If the steelmaker was able to reach the customer in 3-4 days during normal times, it has now increased to 15-20 days because of manpower shortage. The normalcy should come back by September-October.

Mr Rao added “We found out the gaps where we will be able to sell steel. We started analysing worldwide about the steel producing and importing countries. Steel exporting countries Japan, Korea, Russia and China are deeply impacted by Covid. The steel importing countries, either our neighbours like Nepal, Bhutan, Bengladesh, Sri Lanka and Myanmar or Vietnam, Indonesia, Philippines, Malaysia, Singapore or the countries in Middle East like UAE, Bahrain, Kuwait and Oman, have a shortage of steel. We realised that there is a scope of selling 2-3 million tonnes in these countries. So we started contacting the buyers there for the orders. We started taking export orders from April. The fall in crude price has helped in reducing the shipping costs of the exports.”

JSW Steel did not increase the inventory during the lockdown. It had capacity utilisation of 38 per cent in April and it increased to 85 per cent in May.

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