It has been a more challenging year than expected but H2 will be much better than H1, says Tata Steel MD TV Narendran

economictimes.indiatimes.com:

TV Narendran, MD, Tata Steel, says in Europe high energy prices have impacted a lot of the mid-sized and smaller companies and many of them may be vendors, many of them customers and they are a bit fragile and that has an impact on steel consumption as well. Inflation is still persistent and so central banks are increasing rates.

The forecast is that next year will be much better than this year because inflation will have settled and the rate hikes over.Narendran further said that “China after a long time has started exporting about 8 million tonnes of steel a month. If it comes back to 5 million level, steel prices will stabilise at $600 or higher whereas if they start exporting 8 or 7 million tonnes as they are doing now, then steel prices will be in the $530 to $580 range.”Tata Steel’s consolidated net profit fell 92% year-on-year to Rs 634 crore for the first quarter ended June. The company had reported a profit of Rs 7,765 crore in the year-ago period. What caused this fall?If you look at it globally, the recovery in steel prices has been weaker than we thought simply because the recovery in China has been weaker than we thought.

When we were in the last quarter, that is Q4 of last year, the thinking was that Chinese recovery will be strong and hence steel prices will look up but that did not happen and as a consequence, international prices were soft and that has had a pressure on margins. So while the coking coal prices dropped, last quarter we used coking coal which was bought a quarter before that and so the consumption cost was higher than the previous quarter, steel prices could not make up for that higher consumption cost and hence margins dropped sequentially.