Search Global Export Import Trade Data
Recent Searches: No Recent Searches

Tata Steel MD explains why he expects Q4 to be better than Q3, doesn’t rule out exiting UK.

Date: 08-02-2023
Subject: Tata Steel MD explains why he expects Q4 to be better than Q3, doesn’t rule out exiting UK
“Anything that we do has a cost implication. We just need to think about what is the best way forward and evaluate what is best for Tata Steel NSE -0.67 %. I do not want to say that because it is too early to say that. But let us first explore all options. We have done a lot over the last many years and we are continuing to explore options,” says TV Narendran, MD & CEO, Tata Steel.

Two quarters ago, Tata Steel Europe was clearly in a very sweet spot. Now things seem to have taken a 360-degree turn altogether. What went wrong?

Europe has obviously had a pretty difficult year. It started with the Russia-Ukraine crisis because that resulted in two things. One is the demand side became fragile and more importantly, the input costs particularly the gas prices and energy prices shot up. Gas prices and energy prices went up to five to six times the normal levels. So, you see that playing out. So, you had a situation where the coking coal prices went up because of what was happening between Russia and Ukraine. You had energy ..

The second thing because of which the numbers look bad is we are doing some changes to the pensions in the UK. Basically it is getting transferred to insurance companies which is good for us in the long term, de-risks the business quite a bit but that process means there are some non-cash adjustments because of the deferred tax credit that we had on our books and that was a very significant amount, almost Rs 2,000 crore, which also played out in the P&L and hence a negative PAT.

Europe, in fact, has reported loss at an EBITDA level. Given that the second half was expected to be weaker than the first half, could the situation deteriorate then in the fourth quarter before it becomes better?

No, we see the fourth quarter getting better than the third quarter for a couple of reasons. One, if you look at the third quarter numbers, while coking coal cost came down by about $90 a tonne and iron ore prices came down by about $20, our costs are showing a 31 pounds per tonne increase largely because we have taken some NRV losses on some of the stocks that we had. That is like a bit of a one-off kind of adjustment and that is why the EBITDA is significantly more negative than most people ex ..

Secondly, the volumes in Q4 will be higher than the volumes in Q3.

Thirdly, the gas prices and energy prices have started dropping and spot steel prices have started going up. So, for these reasons, we expect Q4 to be better than Q3, though we are not totally out of the woods yet.

But could you help me quantify this? How much better or worse could it get in the fourth quarter considering you are saying it is not going to be significantly better right away?

I cannot give you a very specific number, but let me put it this way. The realisations are going to be about 70 pounds per tonne lower simply because the long-term contracts have got renegotiated and the spot prices have not yet caught up with the long-term contract prices so that is one part of it. But the cost will be at least 100 pounds per tonne lower. That gives us some sense of what could be the margin improvement for sure and then the volumes are going to be about 200,000 to 300,000 tonne ..

Let us talk about the India operations and a lot of price hikes clearly have come through in this calendar year so far. We understand that these price hikes are just a pass through. Do you think they are sufficient enough to nullify the impact of the increase in raw material prices or do you think you will have to undertake some more?

The margin expansion has started happening in India because the margins were at lowest level in November, because prices dropped from October to November, started picking up in December when the international prices started going up. We expect margin expansion to continue. But all the price increases will not flow through the bottom line because there are cost increases, may not be for this quarter because this quarter we expect the coking coal consumption cost to be about $10 per tonne lower th ..

But we are seeing that next quarter, that is Q1 of next year, some of the higher priced coking coal because today coking coal prices are in the $320 to $340 range, whereas it was about $250 to $280 range two months back – will start flowing through in the Q1 of next year. But overall, we see volume expansion and margin expansion continue in India.

Domestic prices are currently at about Rs 59,000-60000 odd per tonne. Could they head to Rs 65,000-70,000? I am trying to put you in a spotlight here.

It will depend a lot on international markets, what happens in China after the Chinese New Year; if it comes back strongly that will give a fillip to international prices. You would have also seen that most of the steel industry in the world over the last two quarters were struggling from a bottom line point of view. We pretty much hit the bottom as far as margins are concerned for the industry.

Everyone is looking at improving the margins and it is going to reflect international prices but clearly we are at Rs 60,000 level. It had gone to Rs 75,000. We do not expect these to go to that level but between Rs 60,000-65,000 is the range we are looking at.

I know it is as much a black box for us as it is for you, but perhaps you have a better reading. What is the situation in China right now?

Well, a number of things. China has surprised us in a positive way in the last three-four weeks. Firstly, the decision they took on reversing the Covid policy has been hugely impactful and a lot of consumption is coming back into China because over the last two-three years. I understand the savings rate in China which is typically about 25% have gone up to about 35%. Just like we saw in India, once the Covid related restrictions are over, a lot of people are going to travel a lot more, spend a l ..

Second thing is the Chinese government has taken a number of steps to stabilise the property markets and there is an expectation that the property markets will stabilise and is coming back because a lot of the revenues of the state or the provinces depend on the success of the property market. So there is a lot of interest in the Chinese government also to stabilise the property markets and construction consumes 60% of the steel that is consumed in China.

Source Name:-Economic Times


Get Sample Now

Which service(s) are you interested in?
 Export Data
 Import Data
 Exim Help

What is New?

Date: 16-03-2023
Notification No. 15/2023 - Customs (N.T.)
Exchange rate Notification No. 15/2023-Cus (NT) dated 16.03.2023-reg

Date: 15-03-2023
Notification No. 14/2023-CUSTOMS (N.T.)
Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver- Reg.

Date: 03-03-2023
Notification No. 16/2023-Customs
Seeks to amend notification No. 50/2017- Customs, dated 30.06.2017, in order to reduce the BCD on Tur Whole to Nil.

Date: 03-03-2023
Notification No. 15/2023-Customs
Seeks to amend notification No. 30/2022- Customs, dated 24.05.2022, in order to discontinue the specified TRQ rate after the 31st March 2023.

Date: 03-03-2023
Notification No. 11/2023-Central Excise
Seeks to further amend No. 04/2022-Central Excise, dated the 30th June, 2022 , to reduce the Special Additional Excise Duty on Diesel.

Date: 03-03-2023
Notification No.10/2023-Central Excise
Seeks to amend No. 18/2022-Central Excise, dated the 19th July, 2022 to increase the Special Additional Excise Duty on production of Petroleum Crude and reduce SAED on export of Aviation turbine Fuel.

Date: 03-03-2023
Notification No. 12/2023-Central Excise
Seeks to further amend No. 10/2022-Central Excise, dated the 30th June, 2022 , to reduce the Road and Infrastructure Cess on Diesel.

Date: 02-03-2023
Notification No. 12/2023 - Customs (N.T.)
Exchange rate Notification No. 12/2023-Cus (NT) dated 02.03.2023-reg

Date: 28-02-2023
Notification No. 03/2023- Integrated Tax (Rate)
Seeks to amend notification no. 1/2017-Integrated Tax (Rate), dated 28.06.2017.

Date: 28-02-2023
NOTIFICATION No. 02/2023- Integrated Tax (Rate)
Seeks to amend notification No. 10/2017- Integrated Tax (Rate) so as to notify change in GST with regards to services as recommended by GST Council in its 49th meeting held on 18.02.2023.

Exim Guru Copyright © 1999-2023 Exim Guru. All Rights Reserved.
The information presented on the site is believed to be accurate. However, InfodriveIndia takes no legal responsibilities for the validity of the information.
Please read our Terms of Use and Privacy Policy before you use this Export Import Data Directory.


C/o InfodriveIndia Pvt Ltd
F-19, Pocket F, Okhla Phase-I
Okhla Industrial Area
New Delhi - 110020, India
Phone : 011 - 40703001