Specialist
Senior Executive at Tata Steel BSL Ltd (Bhushan Steel Ltd)
Agenda
- Capacity utilisation and ASP trends
- Market consolidation impact
- Input cost inflation impact on margins
Questions
1.
What is the current capacity utilisation rate in the steel sector, and how has that trended over time?
2.
What is capacity utilisation today in north and west India compared to south and east?
3.
What proportion of total volume does auto demand typically contribute pan-India?
4.
Auto sales volumes have declined quite significantly. What’s the level of auto sales volume pressure, specifically for steel? How much has that volume come down?
5.
What’s driving relative health in south and east India market?
6.
How would you assess capacity utilisation on a product basis, across flats and longs for example?
7.
If normalisation is expected over the period of one quarter, what’s the growth outlook pan-India for the steel market?
8.
I understand that imports, for example lower-cost steel product imports from China, have recently been putting pressure on the market. How do you analyse the impact of that on demand?
9.
I read that the current hot-rolled coiled prices are at a 6% premium to landed, free trade agreement imports, but how wide is that spread typically? Do you think that spread will lessen, and what’s the impact?
10.
Moving on to supply, considering the amount of capacity in the market today, who’s still adding capacity and how much?
11.
Generally what kind of capacity is being added today by the integrated steel players?
12.
As the market has undergone some stress over the past couple of years, how disciplined will the integrated players be about adding capacity? Do you think planned capacity will actually come to market?
13.
From an operational, strategic and commercial perspective, what are the typical key challenges when an integrated player comes to market, plans and tries to add capacity?
14.
Why would the integrated players build out the capacity themselves? There’s been acquisition activity, but why does it make sense for them to pursue a greenfield strategy today?
15.
What would you consider an asset that is of good condition? What do the players consider if they are pursuing an inorganic growth strategy, and what do they measure or pay the most attention to when observing an asset?
16.
Regarding the iron-making conversion facility, you mentioned preference for blast furnace in this particular case, but what are the KPIs? Does it need to be a certain iron-to-steel conversion ratio that you’d consider is good?
17.
You mentioned that the downstream is all about mechanisation and automation. What are the KPIs here?
18.
You mentioned that one of the challenges was many of the assets that are up for sale today are distressed, and they haven’t had much investment over the past couple of years. How much would it cost to automate and fix production lines of a purchased downstream asset or integrated facility?
19.
Still focusing on the assets undergoing resolution, so some of the downstream players specifically, and Essar as well, how do you assess what’s in the market today? What is attractive to you, if anything?
20.
What are JSW, ArcelorMittal or SAIL’s strategies?
21.
Do you think there’ll be more acquisition activity from Arcelor and JSW, or are the assets that are undergoing resolution today really the last in the pile and therefore probably less attractive?
22.
Can you help us understand the raw material challenge? I believe iron ore is above USD 120 per tonne now. How much are Indian steel manufacturers paying for these inputs?
23.
Considering how blast furnaces blend, where do you think their average iron ore cost per tonne would be today, especially given what has happened to prices?
24.
What’s happening to some of the other inputs, such as coking coal, pellet?
25.
Are there any other cost inputs we need to be keeping an eye on, or that are putting pressure on margins?
26.
Net-net, what does EBITDA per tonne look like for integrated steel players in India?
27.
Let’s use a large range of USD 120 per tonne to USD 180 per tonne EBITDA. With demand being under pressure today, what do you think the next couple of quarters will look like from an EBITDA perspective? Are they going to come down generally or are remain stable?
28.
What do you think people are missing or getting wrong when they’re forecasting, or when you speak to analysts?
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