JSW's Acharya On Tariffs Impact On India's Steel Sector

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00:00I think the tariff negotiations are underway for India on an overall basis and for the steel

00:06tariffs as well. As you rightly said, the impact on India on a direct basis is very limited,

00:13but indirectly, you know, surplus steel can find its way into India. And that's something which

00:20is a risk for us. Indian government is conscious and the industry is conscious about that. And we

00:25are taking measures to see that dumping does not take place. And in relation to that, it is not

00:33just about the US, it's also about the EU proposing 50% tariffs on steel. You talked about dumping.

00:40Could that be an even bigger problem? Yes, the European Union proposal, which has now gone to

00:49the European Council and the European Parliament, gives an indication that they are also concerned

00:55about the tariff impact which it may have on India, sorry, on Europe. And therefore,

01:02they're proposing to reduce the quota quantity and double their duty. I think we'll have to watch

01:09how it unfolds. However, I think the positive tailwind could be the reconstruction demand,

01:16which may come up in the Middle East and Ukraine post the secession of the war. India remains a very

01:26positive growing market. We have been growing in double digits for the past four years. We see a

01:32strong growth for the next decade or two. And I think from an India domestic market perspective,

01:39we remain, we remain very optimistic and constructive.

01:44The thing is, safeguards have been put in place. But despite those safeguards,

01:48we know that import volumes have been rising. How are you navigating all of that? And are those

01:54safeguards enough?

01:55So the safeguards when they were announced in the month of March have been positive. The imports have

02:04gone down. But you're right, it over the last two months, import has inched up again. That's something

02:09which we need to watch. The uncertainty in the world is causing that move. From a safeguard and

02:21anti-dumping, we are looking at various anti-dumping measures as well on countries and products where

02:27we see an injury. Those are also being attended to by the Director General of Trade. And we hope to

02:33see some action on that soon. So we will have to keep on watch on the inflow of trade into the country.

02:42The domestic demand is one of the fastest growing in the world. And therefore, we remain

02:47vulnerable to external challenges which may come.

02:52Right. So we know that those safeguard duties are due for renewal. It does make sense then for

02:59them to be extended by the government. Would you agree?

03:03Absolutely. The government has already proposed that the safeguard duties should be extended for

03:09three years. I think we should see that getting finalized by November or so when it is up for

03:17renewal. When it comes to raising steel prices, we know there have been headwinds. What need to

03:24happen? What factors need to align for you to be able to do that?

03:29So on the positive side, let me say that July, September quarter, if you've seen our performance

03:36as well, we had a very strong operational performance in spite of a seasonally weak quarter

03:41in India because of monsoons and prolonged monsoons this time.

03:47The demand post monsoons is picking up because, you know, in Diwali, we have seen a very strong

03:54consumption sale on the back of GST reduction and interest rate reduction in India. And we are hopeful

04:02that the consumption story in India will actually now unfold at a faster pace. The capex by the central

04:09government and the state government, we will see that also going up in the second half of this

04:15financial year. And that also should aid steel demand. So from a demand perspective, India, we

04:20remain very optimistic as we go into the next half. The only thing which we need to be wary of is

04:28any kind of imports which comes into the country at low prices and impacts us. That's something which

04:36we will be working along with the government to see that at least dumping doesn't happen into the

04:41country.

04:43How about in terms of iron ore supply? We know that there have been constraints. Constraints have

04:48been tightened. How are you looking at it?

04:51I don't know. Suppliers in the country have to really move up in line with the steel production,

04:58which is going up. If you really look at the last year's production, we had a production of 152

05:04million tons. We are expecting that this will move up by another 100 million tons over the next five

05:09to six years. So therefore, you will require a substantial amount of iron ore to be locally produced.

05:16The companies and the mines are being pushed to gear up for that. And the government is taking

05:22necessary measures to see that all the mines which have been taken up actually start producing wherever

05:29there are any constraints. So there is a government push to see that iron ore production in the country

05:34increases. We are hopeful that in the next one year, there are policies which are coming in for

05:40auction, which will make auction easier. We'll also make sure that people do not squat on resources.

05:46That means they get a mine on an auction, but don't sit on it. They should produce and see that the

05:51material reaches the market. Government is taking steps to ensure that. And I think that's very

05:56positive and we look forward to a very constructive engagement of that.

06:01Right. If you take a look at the next 12 to 24 months, do you see iron ore perhaps becoming,

06:06you know, a bigger share of your raw materials sourcing strategy?

06:11Yes. So, you know, iron ore is the green ingredient for steel. As far as JSW Steel is concerned, we have

06:19about 23 mines, which we had won through an auction process. We have about 1.6 billion tons of resources.

06:27Out of that, we have certain mines under operation. Some more mines are yet to come into operation as the

06:35approvals and clearances set in. In addition to that, as we ramp up our capacity from 34.2 million in

06:43India today to 50 million tons by the end of this decade, we continue to look for new assets which

06:49make strategic and economic sense for us as they come up for auction. So we are keenly watching the

06:55iron ore space. Our idea is to see that we at least have a 50 percent raw material security

07:02in terms of iron ore and cooking coal both. And we continue to pursue that goal.

07:07Jayan, I want to take a look at your joint venture with POSCO. What's the status of that? What's the

07:13timeline for this collaboration? We are progressing on the documentation. I think both the parties are

07:22actively engaged to see that the documentation around the joint venture is closed soon. We have

07:29identified some land in Orissa for putting up the works for the plan. We would be finalizing that in

07:39the next few months and then we should be ready to go into the approval process for taking the requisite

07:49approvals for starting the operations. I think by the end of this financial year, we should be able to

07:56close everything and start getting the approvals and maybe within a year start work on crowd.

08:04And what's the goal? What's the target for this joint venture?

08:08Initially, we would be looking at a capacity of about 6 million tons in the east of India and

08:15it can be scaled up over time to 10 million to 12 million tons.

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