Tata Steel sales down 4% in Sept quarter

Our Bureau Mumbai | Updated on October 10, 2019 Published on October 10, 2019

A seasonally weaker monsoon quarter affected the overall demand for steel   -  Bloomberg

Tata Steel has reported a four per cent fall in domestic sales to 4.14 million tonnes (mt) in the September quarter against 4.32 mt logged in the same period last year.

The company’s production was up 4.50 mt (4.30 mt), said the company in a statement on Thursday.

During the quarter, Tata Steel said overall economic activities in the country weakened further as reflected in low investment sentiment and demand slowdown. This was evident in plummeting vehicle sales and weak GST collections.

Moreover, a seasonally weaker monsoon quarter affected the overall demand for steel. The government has announced various measures to stimulate economic activities and market sentiments.

However, the benefits of the same in terms of new private investments and improved domestic consumption will potentially manifest only in the longer term. The recent rate cuts by the RBI are a welcome step to improve liquidity though transmission of the rate cuts is not evident and hence the credit off-take has not yet picked up, it said.

However, as the monsoon season comes to an end and the festive season starts, an improvement in sentiment is expected to trigger a pick-up in consumption and push up steel demand, it added.

Global scenario

In Europe, steel demand was marginally up at 2.28 mt (2.27 mt), while in South-East Asia, it was down at 0.61 mt (0.62 mt).

Tata Steel said global business confidence remained subdued during the second quarter of FY20 as weakening economic activities and prolonged uncertainty over trade conflicts impacted investment decisions and trade flows.

The accommodative monetary policy stance by key advanced and emerging economies is yet to show any noteworthy impact on economic activity levels. Consequently, apparent steel demand remained weak, weighing on steel prices across geographies, it said.

Though the regional spot steel spreads have begun improving since mid-July from the lows seen in June quarter with softening of coking coal and iron ore prices, a meaningful benefit of this will flow through only in the next few quarters.

In Europe, the steel industry continued to face significant headwinds amidst lower demand conditions due to Brexit uncertainty and trade conflicts.

Published on October 10, 2019
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