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JSW Steel has decided not to bid aggressively for Odisha iron ore blocks in the next auction, owing to weak steel demand.JSW Steel bid aggressively for three category-B iron ore blocks in Karnataka last month, and is unlikely to pay a premium for the Odisha blocks, said a senior JSW Steel official.
The bidding will be in two phases — the third week of August and September. Eight mines with reserves of around 573 million tonnes (mt) are expected to come up for auctions in August. A JSW spokesperson was not immediately available for comment.
"Odisha has a huge supply potential of iron ore but there is a lack of matching demand for such a huge quantity. Therefore, there is a potential risk to pay a huge premium for Odisha iron ore blocks," said the official.Quarter-on-quarter steel demand across sectors — automotive, capital goods and consumer goods — was weak, though infrastructure and construction improved marginally.
Total finished steel stock at the end of April 2019 was at 9.93 mt compared to 7.49 mt in the previous year. At the end of May 2019, it was at 10.1 mt vis-a-vis 7.4 mt in 2018.
The weak demand pushed the prices of hot-rolled coils down by around Rs 2,500 a tonne since May and TMT bars by Rs 5,000 a tonne during the same time.
For JSW, bidding aggressively for the Odisha blocks would mean additional investment in a weak market, especially after having paid a premium for the Karnataka mines. JSW paid almost a 100 per cent premium for the Karnataka iron ore blocks.Logistically also, Karnataka makes more sense for the company as it requires around 25 mt of iron ore for its flagship 12-mt Vijayanagar steel plant, the senior JSW official pointed out...Read More
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