Tata Steel’s TV Narendran: Demand has hit pre-pandemic levels

Strong demand from the automobile and infrastructure building sectors has pushed steel consumption to pre-Covid levels in India, multiple price increases by steel makers notwithstanding, a top executive of Tata Steel, one of India’s biggest steelmakers said.

Speaking to BusinessLine, TV Narendran, Managing Director and CEO, Tata Steel, said, “(Steel) Demand is already at pre-Covid levels. In fact, if you see the steel production in India, we are currently at 30 million tonnes a quarter, which is 120 millions a year. And if I allow for exports, we are pretty much at pre-Covid. Because pre-Covid we were producing 103 million tonnes. We have actually recovered quite well.”

Squeezed margins

The surge in demand for steel products comes amid squeezed margins for consumers of the metal, with the automobile sector feeling the sharpest pinch. Car, two-wheelers and truck makers have revised their prices 2-3 times in the last four months following a hike in steel prices and other raw materials. But with the car industry sitting on pending orders of 5.5 lakh units demand is far outstripping supply.

“Demand is coming back with the focus on infrastructure. China is managing its own domestic demand. Overall, the sentiment is positive than what it was four weeks ago. We expect steel prices to be firm over the next few weeks. Already some price increases have happened but we have not fully recovered the drop that happened in November and December,” Narendran added.

Profit grows 139 per cent

The company on Friday posted a consolidated net profit of ₹9,589.16 crore, a growth of 139 per cent, as against ₹4,010.94 crore in the same quarter last year.

The government outlined improved spending on the infrastructure sector in the Union Budget 2022-23. Besides the outlay of ₹7.5-lakh crore for FY23, Finance Minister Nirmala Sitharaman has said the total allocation for the highways sector has increased to ₹1.99-lakh crore from ₹1.18-lakh crore in FY22.

“Focus on infrastructure is great which means more money will be spent on building infrastructure which creates job in construction, putting more money in people’s hands and thereby consumption. Secondly, it creates construction activity which is good for steel demand. Thirdly, the cost outside the factory gate dilutes our competitiveness. As infra gets built those costs will get addressed as well,” Narendran added.

Infra spending

The boost in spending on infrastructure complements investments committed by the private sector. The private sector had rolled back planned investments in light of the disruption caused by the pandemic.

Narendran added, “Private sector investment has started to come back and it has been led by the steel industry. Steel industry has announced more than ₹1-lakh crore investments which is more than any other industry in the Indian economy.”

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