India: SAIL Reports Increase in Finished Steel Inventories in Q1 FY20

SAIL- govt owned major Indian steelmaker had announced Q1FY20 and its earning conference call was organised today. The major highlights are as follows-

1.Company crude steel production down in Q1FY20- Company’s crude steel output stood at 3.93 MnT in Q1FY20 fell by 9% which was 4.338 MnT in previous quarter.

2. Company’s EBITDA moved down in Q1FY20- Company’s EBITDA stood at INR 1766 CR in Q1FY20 decline by 28% which was INR 2461 CR in previous quarter.

3.Company’s saleable steel production inch up in Q1FY20- Company’s saleable steel production stood at 3.653 MnT in Q1FY20 fell by 11% which was 4.123 MnT in previous quarter.

4.Company’s saleable steel sales decline in Q1FY20- Company’s saleable steel sales decline in Q1FY20 to 3.249 MnT fell by 21% which was 4.133 MnT in previous quarter.

5. Surge in finished steel inventory levels - As per concall highlights govt owned company mentioned that finished steel inventory stood around 1.5 MnT by end of June quarter.Thus finished steel inventory increased by 2.88 lakh tonnes in Q1 FY20 against previous quarter.

6. Finished steel prices decline on monthly basis- In Q1FY20 net steel realization (NSR) in last quarter for long steel stood around INR 41608/MT and for Flats INR 40,080/MT. In July it was INRs 38,514/MT in Long & INR 36,135 in flats. Thus on monthly basis finished steel prices moved down by INR 1000-1200/MT. However the same on quarterly basis decline by around INR 3000/MT. Amid sluggish domestic demand, steel prices have witnessed sharp decline.

7. Imported coking coal prices is expected to decline further-Imported coking coal cost stood at USD190/MT in last quarter which is expected to come down by USD 20-25/MT in this quarter.

8. Company aims to cross 16 MnT its saleable steel output in this fiscal- Company mentioned in its Q1FY20 results that they are aiming to achieve over 16 MnT of saleable steel output in this fiscal

9.SAIL ‘s MoU with Indian railways- SAIL govt owned company signed MoU with Indian Railways for supply of 1.4 MnT rails for FY20.

10.SAIL plans more usage on beneficiation plants- SAIL is planning to put more beneficiation plants to utilize low grade iron ore fines inventory.

However on the imposition of safeguard duty discussions, updates are waited from Ministry.