Tata Steel Managing Director (MD) and Chief Executive Officer (CEO) TV Narendran expects steel prices to be about ₹1,000 per tonne lower on a sequential basis.
Speaking in an interview with CNBC-TV18 a day after the Tata Group major's December quarter results, Narendran said, "Steel prices in the last quarter, on average, were about ₹1,100 per tonne higher in Q3 over Q2. This quarter, we expect it to be about ₹1,000 lower. I am looking at quarter average to quarter average."
On coking coal costs, the Tata Steel MD and CEO said, "Last quarter (Q3FY24), it went up by about $10 from Q2, and in Q4FY24, it is expected to go up by another $10 compared to Q3."
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Tata Steel CEO also said the company's net debt has been impacted because of the losses in Europe. "Our long-term commitment to continue to reduce net debt stays, and we certainly want to bring it down below 77. I don't want to give you a number just yet. But certainly, we have to bring it down this quarter, and we will continue to bring it down next year."
Narendran believes the Budget 2024 will focus on infrastructure as it helps in the cost of doing business because logistics costs are a significant part of our costs outside the factory gate.
"I think we should continue to work on the ease of doing business both at the central level and the local level. And of course, the focus on manufacturing and support for that is certainly well," he said.
The Tata Group company swung into black, posting a consolidated net profit of ₹513 crore in the third quarter against a loss of ₹2,224 crore a year ago.
The steelmaker's net debt was flat quarter-on-quarter at ₹77,400 crore, with strong liquidity at ₹23,349 crore. India revenues remained stable at ₹35,011 crore, supported by consistent growth in deliveries.
Crude steel production in India rose to 5.35 MT, contributing to the best-ever third-quarter sales of 4.88 MT. Revenue from operations in Europe declined by 12.5% to ₹18,141.97 crore, impacted by production shortfalls in the UK and relining activities in the Netherlands.
The company incurred ₹4,715 crore in capital expenditure during the quarter and ₹13,357 crore between April and December.
Steel companies in India benefited from an uptick in steel prices amid strong demand fueled by heavy infrastructure spending by the government, but higher coking coal costs weighed on the gains. The companies may not have been able to pass on the full impact of rising costs due to the availability of cheaper Chinese imports in the market.
"The global operating environment has been complex, with the economic slowdown in China and geopolitics weighing on commodity prices in general. During this quarter, China has exported between 7 and 8 million tons of steel every month, which is the highest since 2015, and this has adversely impacted global steel prices as well as profitability," Narendran said.
