homemarket Newscommodities NewsSteel prices hot: Indian cos have an advantage, says Tata Steel's TV Narendran
Steel prices hot: Indian cos have an advantage, says Tata Steel's TV Narendran
Indian steel companies had an advantage of iron ore availability, Tata Steel's managing director and CEO TV Narendran told CNBC-TV18. He said coking coal has a big impact on the Indian steel industry, because India is one of the biggest importers of coking coal in the world. The Ukraine-Russia war also had a significant impact on global steel dynamics.
Indian steel companies had an advantage of iron ore availability as the world struggles to meet demands because of the Russia-Ukraine war, Tata Steel's managing director and CEO TV Narendran has told CNBC-TV18.
"I think India doesn't have to import iron ore. So to that extent, India has insulated, but not that Russia and Ukraine used to export iron ore. It's more about exporting the semi-finished steel that was being produced there excessively," he said.
TV Narendran said he thinks coking coal has a big impact on the Indian steel industry because India is one of the biggest importers of coking coal in the world. "It exceeded China as the biggest importer of coking coal last year, and this coking coal, which has been at a high price in the $300 to $400 range is now at $650 to $700. And that's typically 40 percent of the cost of making steel," he said.
"I am not even counting the impact it has on the working capital needs of the steel industry, because suddenly a critical input which you import, and hold in stock for two-three months to take care of the risk in the supply chain is suddenly costing twice as much as it was earlier. So there is a huge impact on cost, there is a huge impact on the working capital needs and of course, some of it is getting recovered through the price increases," he added.
The Ukraine-Russia war has had a significant impact on global steel dynamics. Russia exported 30-35 mtpa of coking coal last year while Russia and Ukraine exported 45 mt of steel in the same perid.
Union Steel Minister Ram Chandra Prasad Singh recently said the Centre will take steps to ensure a steady supply of coking coal for domestic steel companies, which are struggling with cargo disruptions and rocketing prices in the wake of Russia's invasion of Ukraine. "We are discussing amongst ourselves, and we will definitely chalk out some plan on how to deal with this situation," he said.
"Higher coking coal costs will hit working capital. The cost impact will be felt towards the end of Q1FY23," TV Narendran said.
Steel prices have been hiked by $6,000/t this month and they are up by $10,000/t since February 2022. "Steel price hikes not enough as input costs have spiked," he said.
Europe contracts have been revised upwards from January 2022. "FY23 could be better for Europe. Disruption in Europe has led steel prices to $1,100/t," he said.
The MD & CEO of Tata Steel said autos consume 20% of steel in Europe and auto consumption is getting hit by semiconductor shortage. He said was watchful on demand side constraints in Europe.
"The plan is to turn around Neelachal Ispat Nigam Limited (NINL) & payback bulk of the debt next year, he said. "Net debt to earnings before interest, taxes, depreciation and amortisation (EBITDA) will be on guided lines of 1x. Debt reduction plan continues ex-NINL," he said.
The government in January approved the sale of NINL to Tata Steel Long Products. NINL was on divestment by the government.
For a ball-by-ball coverage of today's (March 15) market action, click here
(Edited by : Shloka Badkar)
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