Steel Authority of India (SAIL) expects its average steel prices to drop by around ₹1,000 per tonne this quarter. This decline is attributed to the continued impact of inexpensive Chinese steel imports on the local market, according to a senior executive.
For the June quarter, SAIL’s average steel prices were ₹53,700 per tonne, down ₹800 from the March quarter.
Despite recent drops in coking coal prices, SAIL anticipates that its costs will stay roughly the same as the June quarter. This is because the company has secured more coking coal than usual through long-term agreements, said Anil Kumar Tulsiani, Director (Finance). The cost of coking coal was ₹22,000 per tonne in the June quarter and is expected to remain stable.
SAIL is also working to reduce its coal inventory in the coming months, which should help improve its working capital. The company’s debt increased by over ₹5,000 crore this quarter due to higher coal and steel inventory.
CAPEX Plans
SAIL currently has a steel production capacity of 20 million tonnes and plans to increase it by 15 million tonnes over the next five to six years. The expansion will cost between ₹100,000 and ₹110,000 crore. The company will begin by upgrading existing plants, aiming to add 3 million tonnes of capacity at a cost of about ₹10,000 to ₹11,000 crore over the next few years. Additionally, SAIL plans to invest ₹37,000 crore to increase capacity by 4 million tonnes at its IISCO steel plant.
For the current fiscal year, SAIL is set to spend ₹6,300 crore on capital expenditures, with a projected increase to ₹7,000 crore next year. The company spent ₹986 crore on capex in the June quarter and aims for a production target of 20.87 million tonnes and sales of 19.26 million tonnes for the year.
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