Sumary of Tata Steel bogged down by price heat, coal costs:
- Earlier this month, Tata Steel Ltd reported strong growth in consolidated net profit and overall earnings performance in both the Indian and European markets for the September quarter.
- The biggest concern is the recent pressure on steel prices that has emanated from weak demand from China.
- Steel prices in China have begun to decline, which means prices in India would also follow.
- Considering that Tata Steel’s shining performance was mostly due to a surge in steel prices, the dip is a disappointment.
- View Full ImageHealthy improvement A Nomura Global Equity Research report dated 22 November on weekly trends indicates that Chinese steel prices continue to fall, while Indian trade prices are also under pressure with domestic prices above import parity.
- During the week ended 19 November, Chinese hot rolled coil (HRC) prices had declined by $30 a tonne week-on-week to $780 a tonne as the demand situation remained weak.
- Indian HRC prices, too, fell by ₹1,000 per tonne week-on-week to ₹71,000/tonne with channel inventory remaining high, and consequently restocking demand continued to be weak.
- What’s more, with weakening exports and domestic steel prices being at a premium to import parity prices, domestic mills may resort to more price cuts.