Mumbai: The nation’s second biggest steel producer Steel Authority of India Ltd (SAIL) and JSW Steel Ltd forecast higher sales as a $14 billion (Rs72,240 crore) Union programme to build houses and roads revives demand.
JSW will run its mills at full capacity as orders will probably double to 600,000 tonnes this month from a year ago, JSW vice-chairman and managing director Sajjan Jindal said at a conference in Hyderabad on Monday.
SAIL’s sales in the January to March quarter may beat the 3 million tonnes (mt) produced a year earlier, finance director Soiles Bhattacharya said.
Prime Minister Manmohan Singh’s government has approved Rs700 billion of projects since August to build roads, ports and bridges. State spending will help the Indian steel makers weather the global recession that’s curbing orders at ArcelorMittal and Tata Steel Ltd’s Corus unit.
“Demand is slowly picking up,” said Bharath S., an analyst at Sundaram BNP Paribas Mutual Fund. “With interest rates coming down, people are again starting to build houses and look at buying cars.”
In the next fiscal year, the Indian government plans to spend $7.95 billion under the Bharat Nirman programme to build rural infrastructure, including roads, and networks of telephones, electricity and irrigation.
SAIL shares rose 2.2% to close at Rs83.7 in Mumbai on Monday. JSW gained 2.01% to Rs184.95, while Tata Steel climbed 1.29% to close at Rs168.85. The benchmark Sensex index rose 2.13%.
Mumbai-based JSW, India’s third biggest producer, plans to build a nationwide network of sales outlets with as many as 600 branches, Jindal said on Monday.
Earlier this month, the company said it expects sales to rise as much as 60% this quarter from the previous three months.
New Delhi-based SAIL, which sold 12.3mt in the last fiscal year, had said earlier that sales last month rose 9% to 1.17mt from a year ago. Tata Steel had said on 6 March that sales in India, excluding its Corus unit, surged 47% in February.
Demand is picking up because people think prices have bottomed, SAIL’s Bhattacharya said in an interview, while attending the industry conference in Hyderabad.
Sales should be sustained for at least the next two quarters, aided mainly by rural construction, Jindal told reporters at the conference on Monday.
JSW completed expanding annual capacity to 6.8mt last month from 3.8mt.