Steel major Tata Steel reported that India’s apparent steel consumption rose by 4% q-o-q on recovery of the economy with an improvement in automotive production in passenger and commercial vehicles. Infrastructure and construction goods posted a steady growth too, SteelMint learned from the company’s investor call held today.
In addition, the company’s guidance on sales for FY23 without considering NINL, is 0.5 mnt more than in FY22 as they are running at full capacities.
Tata steel’s expansion plans:
- 6 mnt/year pellet plant will be commissioned in Q3FY23 in Odisha’s Kalinganagar.
- 2.2 mnt/year cold rolling mill (CRM) complex is planned to be commissioned by Q4FY23 along with the 5mnt/year phase II expansion of the Kalinganagar plant.
With the commissioning of the pellet plant and CRM complex, the steelmaker will be able to save costs and enrich its product mix.
Tata Steel further aims to complete acquisition of NINL in the current quarter (Q1FY23), CEO TV Narendran said during the company’s earnings call recently. Notably, Tata Steel had put the highest bid for NINL at INR 12,100 crore for a 93.71% stake in the company, which was approved by the government. NINL has a 1.1 mnt integrated steel plant and a captive iron ore mine in Odisha’s Jajpur district. The company plans to expand NINL’s capacity to 10 mnt/year.
Moreover, it plans to set up its first EAF of 0.75 mnt/year capacity in the north, close to its scrap generating hub, and go for a modular expansion in southern and western regions.
Roadmap of 40mnt by CY30: During the decade, Tata Steel aims to expand NINL’s capacity by 1 mnt to 10 mnt, Kalinganagar’s from 8 mnt to 16 mnt , and Angul works’ capacity from 5 mnt to 10 mnt. In addition, the company may grow through the electric-arc furnace route which will be a capital-light growth model.
Impact of coal prices: In Q4FY22, coking coal consumption costs rose by $50/t compared to Q3FY22. On the other hand, in Q1FY23, the steel major anticipates the same will rise by $100/t against Q4FY22 for its Indian operations.
However, Tata Steel’s net sales realization is likely to be higher by INR 8,000-8,500/t in Q1FY’23 compared to that of Q4FY’22.
Other highlights
- Highest-ever crude steel production: Tata Steel reported the highest-ever annual production of 19.06 mnt in FY22, up 13% y-o-y against 16.92 mnt. Production in Q4FY22 stood at 4.90 mnt, up 2% against 4.81 mnt in the previous quarter and 3% against 4.75 mnt in the corresponding period last year (CPLY), as per the company’s quarterly results announced yesterday.
- Steel sales up 6% y-o-y: Total steel sales reached 18.27 mnt in FY22, up 6% compared to 17.30 mnt in FY21. Out of which, steel exports were recorded at 2.64 mnt, down 28% in comparison with 3.66 mnt during FY21.Tata Steel achieved its highest-ever quarterly sales at 5.12 mnt in Q4 versus 4.42 mnt in Q3. In addition, the steel major delivered better net sales realisations (NSR) compared to its guidance with a drop of around INR 3,500/t to a limit of INR 1,500/t.
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