Middle East peace, reconstruction can help stabilise steel market: JSW Steel JMD Jayant Acharya

MUMBAI: The demand for reconstruction globally, especially in the Middle East, will help stabilise steel markets, said Jayant Acharya, joint managing director at JSW Steel. India’s largest steel-maker’s volume growth and cost control, along with sustainable margins, is likely to give it the cash flows needed to continue investing in capacities, while strengthening its balance sheet. Edited excerpts:

What do you expect demand to look like for the rest of the fiscal?
The demand in India remains strong, and is a tailwind for us, but it also attracts other sellers globally to come to India. The Middle East conflict also saw some steel being diverted to India, which we will need to watch. The government has initiated anti-dumping measures for hot rolled coils, where we have seen a surge in imports, and a possible threat of injury. The second half will see stronger growth as is usual.


Given the current geopolitical movements, the government is also keen that India should be more self-reliant, and so, steps will be taken to see that there is no structural damage because of surplus trade flows into India.

How are you approaching the Middle Eastern markets given the reconstruction opportunities in the region?
The Middle East will certainly provide a growth opportunity once the situation normalises. The steel going from Iran to the Middle East was also impacted, which will give India and other steel-producing countries an opportunity to play in that market. Either way, it will help balance demand, which would help us directly or indirectly. Whoever supplies steel to them – that steel will not look for different shores, and that will stabilise the market.

The reconstruction demand in Ukraine and Palestine will also draw a lot of steel post stabilisation. Europe is also picking up their infrastructure and defence initiatives, so they will rebuild some of their infrastructure. There is a lot of reconstruction demand emerging globally, and that is the space we need to watch out for.

Is the current demand environment the best that you have seen in several quarters?
It is among the better quarters for sure after the super cycle we saw in 2022. The flare in commodities then because of the Russia-Ukraine war was more because of supply chain challenges. What we are seeing now is demand-based growth, which is sustainable and structural. I think this is a good era we are stepping into, and hopefully geopolitics will stabilise.

How important is the Rs 15,000-mark for EBITDA/tonne when companies are planning additional capacities? And what is the aspirational number you are looking at?
It is important to have a sustainable EBITDA margin to be able to fund your operations and invest back into capacity expansion. Even at this Rs 15,000 level, our EBITDA per tonne is only $158. In the last few years, we have said that $145–150 is the level we should have, but because of rupee depreciation we are still at $158, even though in rupee terms we have touched ?15,000 a tonne.

Even $150 is a fair number. If you look at global steel pricing, India is very competitively priced as a country — it is an ideal, and according to me a very sustainable, steel price. For India to be able to grow its infrastructure, manufacturing and consumption, it is sustainable, and a good number for the industry at large.

Does this allow companies to commit to capital expenditure with confidence?
Volatility in margins has prevented companies from going out more confidently and investing in the cycle. If you see a margin of $150 sustained over time, companies naturally get the confidence to invest back. Long-term visibility of demand is one factor, but long-term visibility of sustainable margins is equally important.

We have been able to deleverage our balance sheet and chart growth because we feel timing is equally important for putting up capacities in the country. Sustainable margins certainly improve the confidence of the industry to invest back, and that should be there for a few quarters at least, in sequence.

Tell us about the recent debt reduction and its impact on finance costs?
At Rs 46,157 crore as of June-end, net debt is the lowest in nearly seven years. We have renegotiated some of our loans, repaid expensive loans, and our upgrades are reflecting better on our negotiation capability to secure a lower rate of interest when refinancing. In fiscal 2026, the weighted average interest rate declined to 6.17% from 7.14% and eased further to 6.16% in quarter one this fiscal.

The stake sale in Bhushan Power has helped bring down debt significantly. After the likely stake sale in JSW One, what are the major levers for debt reduction?
It will be structural as we grow our business. About 7 million tonnes of steel capacity which was in the pipeline is now getting fructified, and will give us an incremental EBITDA, which will go into cash flows — partly into our growth projects and part into debt repayment.

What about the costs?
For metallurgical coal, we are trying to blend domestic coking coal and results are looking good in the trial stage — we hope to expand on that in H2. Our focus on Mozambique will be very competitive from a cost standpoint and help us blend the lower-grade, higher-ash coals in India. For iron ore, we continue to operationalise more mines — out of 25, 13 are done and of the balance 12, six will be done in the next 12-18 months. These cost reduction measures will give us structural benefits, and along with volume growth, it will improve cash flows.

With all the mines being operationalised, how much of JSW's iron ore usage will be captive?
Our aim is for coking coal to be around 50%, and iron ore, between 50-75%. But with capacities expanding, we will have to keep adding to the mines we have and operationalise them.