Tata Steel, one of India’s leading steel manufacturers, reported sharp increase in its export sales in the first quarter (Q1FY’22) over sluggish demand in the domestic market. Export volumes stood at 0.65 mn t in the quarter as against 0.51 mn t in the last quarter (Q4FY’21).
However, a year ago, the company exported around 1.47 mn t due to region-wise phased lockdowns.
Other highlights of Q1FY’22
1. Company’s sales volume decline 11%: The company reported a decline in sales volumes by 11% in Q1 to 4.15 mn t in comparison to 4.67 mn t a quarter ago. The decline exhibits a huge impact of Covid-19’s second wave along with weak demand due to seasonal lull in the domestic market.
2. EBITDA up 12% q-o-q: Tata Steel achieved its highest-ever standalone EBITDA of INR 10,274 crore in Q1FY’22, up 12% against INR 9,206 crore in Q4FY’21. On an annualised basis, the EBITDA reported a sharp growth against INR 1,291 crore in Q1FY’21.
3. BSL reports 1% decline in production: Tata Steel BSL’s crude steel production fell marginally by 1% to 1.17 mn t in Q1FY’22 as against 1.18 mn t last quarter. On a y-o-y basis, production volumes surged 77% from 0.66 mn t in Q1 FY’21.
On the other hand, sales volume dropped by 6% q-o-q to 1.12 mn t in Q1FY’22 compared to 1.19 mn t a quarter ago. The production and sales were impacted by the severity of the second wave of Covid.
4. Tata Steel Long Products performance: Due to planned maintenance shutdowns and limited availability of oxygen, Tata Steel’s longs unit reported 8% decline in crude steel production. The production stands at 172k tonnes in Q1 as compared to 186k tonnes in Q4FY’21.
Meanwhile, sales dipped 6% to 162k tonnes in Q1 compared to 172k tonnes in the last quarter.
5. Phase II expansion plans: The company is looking forward to making additions in the pellet plant and CRM complex at its Kalinganagar works, under phase II expansion.
- A 6 mntpa pellet plant willl help the manufacturer in saving costs.
- To enrich the product mix, Tata Steel undertook the 2.2 mntpa CRM complex expansion.
- These installations are likely to be commissioned in FY’22 as per the company’s integrated report for FY’21.
6. Tata Steel South East Asia performance: Production and sales declined q-o-q primarily due to partial lockdowns in Thailand amidst the pandemic.
- Saleable steel production stood at 0.59 mn t in Q1FY’22 as against 0.61 mn t a quarter ago, down by 3%.
- Sale volumes slid 2% to 0.63 mn t in Q1 compared to 0.64 mn t in Q4FY’21.
- EBITDA rose to INR 407 crore in Q1 against INR 295 crore in Q4 of last fiscal on the back of improved prices in both domestic and key export markets.
7. Raw material prices: Iron ore prices are expected to witness pressure with softness in demand from China coupled with improving supply from Australia and Brazil. Coking coal prices are expected to remain range-bound due to the geo-political conflict between China and Australia.
8. Inventory levels: Inventory value increased with higher prices and lower deliveries.
Outlook
Indian steel prices are expected to remain strong in line with international prices, robust demand in India and high raw material prices.
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