Posted on 03 Dec 2024
Falling steel prices and Chinese imports to India are currently more worrisome than demand for steel products in the country. Tata Steel’s Chief Executive Officer and Managing Director T. V. Narendran told about it in an interview.
According to the CEO of Tata Steel, demand for steel in India remains quite strong. In the past few months, there has been a slowdown in the automotive sector. Construction activity in April-September was weaker than the company had expected, in particular due to seasonal factors, and the government spent less on infrastructure.
Tata Steel expects demand to recover in the second half of FY2024/2025 (September-April). Government spending is also expected to increase.
T.V. Narendran noted that 75% of the demand for the company’s products comes from the construction and automotive sectors. However, demand, in his opinion, is less of a problem than Chinese imports to India and steel prices, which affect margins. It is prices that are of greater concern.
The CEO of Tata Steel said that the issue of imposing a duty on steel imports to India is currently under active consideration.
“Meanwhile, there are reports that some Southeast Asian countries are investigating imports from India. We need to respond to this immediately. Today it is steel, but tomorrow it may be any other product. China has excess capacity in all areas,” he said.
Politicians, according to T. V. Narendran believes that policymakers should respond quickly to Chinese export levels, as the governments of the United States, Canada and Europe have done. He believes that the Indian government is looking at this.
As for Tata Steel’s project in the UK, the company’s CEO noted that it could be delayed by 3-4 months due to the election and change of government, but everything is going according to plan now. Both blast furnaces at the Port Talbot facility were closed, an agreement was reached with the unions on a severance package, and more than 2,000 people applied for voluntary redundancy. The company has also placed an order for an electric arc furnace with Tenova Technologies.
“We should get all the permits by June and start construction in July. “We will receive green electricity from the grid. The electric arc furnace should be ready by 2027. The UK government has also authorized duty-free imports of slabs and coils to keep the processing facility running until then. In the UK, we will move from negative EBITDA to neutral or positive over the next two quarters,” he said.
At the same time, negotiations on the “green” transition in the Netherlands are ongoing. Like in the UK, the company has presented a plan, and the government is considering it. The authorities will conduct a comprehensive review and appoint independent experts to examine the proposal. Tata Steel expects the negotiations to be completed within the next three to six months.
As GMK Center reported earlier, the reduction in steel spreads in the first half of 2024/2025 (April-September) affected Tata Steel’s financial performance in the UK and the Netherlands. The company noted that the global operating environment remained challenging.
Source:GMK Center
