Steel firms’ profitability may improve in H2 : TV Narendran

30 January 2017

The profitability of steel companies is likely to improve in the second half of this fiscal, according to Tata Steel managing director T.V. Narendran.

“International prices have improved, ” he said adding that globally, on an average, profitability outlook would be better. “ There is an upside in international steel prices,” Mr. Narendran said.

“Globally 2015 was the worst. The first four months of 2016 were tough but a balance is being seen over the third and four quarters,” he said. “Coking coal prices, which were ruling higher earlier this fiscal, have now softened while steel prices have increased…there is a balance between raw-material and finished steel prices.”

“So, I would expect the steel companies globally to have a better H2 (October to March) than H1. When you look at April to March this year to the year-ago period, steel companies across the world should do better. And Indian companies would mirror that,” he said. “Steel imports and exports are also balanced now (for Indian companies).. most companies are exporting,” Mr Narendran observed.

On the domestic front, he said after a hiccup in November due to the impact of demonetisation on consuming industries, things have now improved. Things are picking up – the demand supply balance is being brought back. ” Mr. Narendran said.

On Kalinganar plant expansion, he said that board approval would be sought by June 2017 for augmenting the three million tons capacity to eight million tons. Green nod has also been received for expanding Jamshedpur capacity to 11 million tons now (from 10 million) through some de-bottlenecking measures.

He said cost of the brownfield expansion at Kalinganar plant in Odisha would be lower than the greenfield project since the common facilities were already in place.“It will take us three to four years to complete the expansion once we get the board clearance.”

On the sector’s budget wish list, Mr.Narendran said that aside from pleading for a waiver on coking coal duty (about 2.5% now), the industry would like to see increase in government expenditure especially on infrastructure.“This has a double impact since it boosts steel sector demand while easing cost of production through improved infrastructure.

“Tata Steel spends Rs. 3000/tonne on logistics – the cost is high and time is lost.. but this would improve if logistics infrastructure improved,” Mr. Narendran said.

Source – The Hindu