JSW reports significant YoY production growth; capacity utilisation improves too

The steel manufacturer JSW Steel reported 5 per cent YoY growth in crude steel production for the month of August 2020. A rise in production levels give definite indications that the economy is well-placed for a strong revival along with an improved demand scenario.

The company reported that the crude steel production for the month of August 2020 stood at 13.17 lakh tonnes. This is a growth of 6 per cent when compared on a month-on-month (MoM) basis and 5 per cent over August 2019 (YoY). The average capacity utilisation during the month of August 2020 was 88 per cent. This is the second consecutive MoM gain in production reported by the company. In the month of July, it had reported a 9 per cent gain in crude production.

Importantly, the capacity utilisation levels have improved very significantly. After the COVID-19 pandemic and lockdown, the utilisation levels had reduced to 66 per cent in Q1FY21 against 46 per cent industry average. The capacity expansion in its Dolvi Plant (Maharashtra) for doubling the steel-making capacity from 5 mtpa to 10 mtpa (in flat products) and two CGL lines of 0.45 mtpa each along with a new 1.2 mtpa of continuous pickling line are expected to be operational in the current quarter.

The stock price has surged 35 per cent within the last one month. Its better-than-expected volume performance, the company's foray into new business such as anti-microbial coated steel products, and better utilisation levels might have helped the gains.