The benchmark price of hot-rolled coil – a key price gauge – was Rs 47,000-Rs 47,500 per tonne on average in the December quarter before hitting a record high of Rs 58,000 per tonne earlier in the month.
Indian prices are following the global trend, he said.
“In June, we were selling steel at Rs 34,000 per tonne,” Rao told ET in an interaction.
“During the first quarter, steel industry losses were around Rs 6,000 crore… China’s steel prices in May were around $316, and now it is $702…and in the US, it was $507 in May and $1,100 in December – the increase is 119%… similar trend in EU,” he added.
Rao said government-aided large infrastructure projects were guiding current steel demand along with a sharp pick-up in the two-wheeler, commercial vehicle and tractor segments.
“The government-led initiatives will continue to be there for the next year too, which will bring back demand. Last year, steel consumption was around 100 million tonnes, this fiscal year so far it is 55 mt; assuming we will do similar consumption in Q4, we will be close to 92-93 mt of steel consumption,” Rao said.
“I don’t consider that pent-up demand will tamper down, I don’t subscribe to that concept. This demand will definitely be there even through next year as far as India is concerned,” Rao added.
The company reported a 14-fold increase in net profit, at Rs 2,669 crore, in the third quarter. Domestic sales in the December quarter were 3.48 mt, up 13% year on year and 16% quarter on quarter and the second-best quarterly sales on record. Supply to the automobile sector rose 57% year-on-year and 30% quarter-on-quarter.
As of December, its cash balance stood at Rs 13,034 crore, and net debt was around Rs 51,793 crore.
The company’s net debt reduction plan depends on the acquisition of Bhushan Power and Steel Ltd (BPSL), he said.
“This quarter, we reduced around Rs 1,100 crore. Our debt goes up or down depending upon whether the BPSL acquisition is done or not. If BPSL does not go through this year, then debt levels will not go up, but ratios are quite comforting,” Rao said.
While its India operations grew, the US and Italy continued to report losses.
“In the US, if I really analyse from last December to now, the operating losses have come down from $334 million to $84 million. So, there is a huge amount of reduction which has happened during the quarter,” Rao said.
The overseas operations underwent maintenance shutdowns during the quarter and the upcoming fiscal year will be one of stabilization and positive operating Ebitda, Rao said.