Jindal Stainless Sets 2.5 Lakh Tonne Output Taget. (Business Standard 22.12.99)

Jindal Stainless Ltd (JSL) is aiming at a production target of around 2.5 lakh tonne for the fiscal 1999-2000 on the back of the upturn in global prices of stainless steel. The company's production during the first half of the fiscal was 1.35 lakh tonne.

A senior JSL executive said: "Since nickel, the prime raw material for stainless steel, has to be imported, there is a lead time of 2-3 months between its import and consumption and therefore in a scenario where nickel prices are rising, operating margins will be higher. Further, with higher production levels, the margins are expected to improve as a result of economies of scale.

Nickel prices had dropped to a 13-year low in December 1998 at $3,800 per tonne leading to a crash in stainless steel prices worldwide. But, following a subsequent upturn in stainless steel demand, nickel prices recovered and reached a 29-month high of $7,695 per tonne on October 19, 1999, and peaked to 8,200 per tonne as on December 6, 1999.

The ripple effect of these trends on domestic prices has been apparent from the fact that prices has increased by 10-15 per cent during the January-October 1999 period.

The average sale price of 200, 300 and 400 series grade of stainless steel at present are $750, $2,150 and $2,000 per tonne, respectively. The company is looking at higher export volumes with the export turnover for the year expected to touch $20 million. In the first half of the fiscal, the company exported 2,700 tonne of stainless steel valued at $4 million.

According to the executive, "The company has export orders worth approximately $7 million waiting to be despatched by December end."

The market for stainless steel products, according to industry experts, has been on an upturn on the back of a recovery in demand from Asia.