MUMBAI: Domestic demand for TMT bars is at about 85% of the pre-Covid levels and is inching up, said Pankaj Malhan, chief executive officer of Vedanta NSE -1.71 % Group company Electrosteel NSE 0.63 % Steels Ltd.
"Demand for the TMT bars segment is still at 85% of pre-Covid levels. That's also because of the monsoon season, but we are very bullish. This demand will be back to 100% in the next month itself,” Malhan told ET.
Electrosteel Steels Ltd. (ESL) had exported about 50% of the steel produced in March. However, the export percentage has come down to zero since June. “Q2 has been a better quarter in terms of demand and production; this is the kind of V-shaped recovery we were expecting,” he said.
"With steel prices moving up by 25% in Q2, and demand picking up, we are hopeful that we will be even doubling our Q1 Ebitda,” Malhan said.
In February, the company had planned to double capacity at its Bokaro unit and was evaluating a greenfield facility in Karnataka. Malhan said those plans are being reviewed.
“We were quite bullish back then. Since mid-March we saw some pushback due to the pandemic and the subsequent lockdown. We will now be going to the drawing board again, reworking and restarting the entire exercise,” said Malhan.
Vedanta had acquired ESL in 2018 as part of its forward integration strategy. Recently, the company law tribunal approved the merger of its arm Vedanta Star Ltd. with ESL.
ESL, which majorly produces long products like TMT bars and wire rods, is witnessing a surge in demand for automotive grade wire rod products such as springs.
“It started on a slower mode, but the wire segment, which typically goes into rails and automotive parts, has started picking up. In terms of TMT bars, demand is inching up during the last three-four month,” Malhan said.
The CEO said that in order to secure the raw material requirements of the company, he is open to participating in upcoming mining auctions. “We would be open to any of the auctions that will come up. It just needs to make good financial sense to participate,” he said.
Source:-economictimes.indiatimes.com