Tata Steel told in a
meet with MF Global securities that Indian steel market will remain robust with
strong steel prices until May 2012 and marginally lower raw material costs. However,
Euro region might witness downtrend due to low economic activity. Extract of
meeting is below: –
- Domestic Business: The
domestic operations have seen a steady quarter with strong steel prices until
May 2012 and marginally lower raw material costs (lower coking coal prices
offset by rupee depreciation). The margins are expected to be flat on a
sequential basis (excluding the impact of one-time employee provisioning) on
account of lower sequential volumes (due to seasonal factors and Blast Furnace
F shutdown) - European Business: The
margins are expected to improve on a sequential basis; however, it will be
lower than expectations due to the subdued pricing scenario. The company has
not been able to mirror the movement in the spot steel prices in its contract
negotiations, leading to flattish to marginal improvement in realizations on a
sequential basis. Further, huge forex swings will also have some impact on the
company’s profitability (raw materials are priced in US dollars, while revenues
are priced in a basket of currencies). - South East Asian (SEA)
Business: SEA operations are expected to stay steady with a recovery in
the Thailand operations post floods and a stable Natsteel business. Source:MF Global
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