Tata Steel has called off plans to sell its South East Asia (SEA) business and has reclassified it to Continuing Operations following a 15pc improvement in steel production in Q4 FY2021 (January-March) compared to the previous year.
In Q4 2021, South East Asia’s sales improved by 9pc from Q3 and 7pc from the prior year supported by demand recovery. The segment’s EBITDA improved due to higher sales and robust spreads.
The company expects global steel demand to increase by 5.8pc in 2021 on economic recovery and progress in COVID-19 vaccination drives.
Outlook
▪ Steel demand in India is stable aided by economic recovery, improved liquidity, and government spending.
▪ In the EU and UK, demand recovery is expected to be healthy and driven by a recovery in steel-consuming sectors, led by auto.
▪ Re-imposition of lockdown amid a resurgence of COVID-19 cases, and a scale-down of policy support could lower domestic demand, but export offers good opportunities.
▪ Asian steel prices are expected to remain high on strong demand recovery, production curbs in China, and higher raw material prices.
▪ Steel prices in India and Europe remain resilient driven by strong global steel demand and prices amid tight supply.
▪ Seaborne iron ore prices will remain high supported by robust demand from China and higher capacity utilization by steelmakers globally.
▪ In the near term, coking coal prices are expected to remain calm amid the political tussle between Australia and China.
Tata Steel’s consolidated Q4, FY 2021 results
| Q4 FY2021 | Q4 FY2020 | %Change | FY2021 | FY2020 | |
| Production (mn mt) | 8.2 | 7.9 | 4 | 28.54 | 30.63 |
| Sales (mn mt) | 7.83 | 7.06 | 11 | 28.5 | 28.88 |
| Turnover (Rs bn) | 499.77 | 360.09 | 39 | 1,562.94 | 1,489.72 |
| EBITDA (Rs bn) | 182.53 | 68.38 | 167 | 108.38 | 62.67 |
| Profit after Tax (Rs bn) | 71.62 | (16.15) | 81.90 | 11.72 |
In FY2022, Tata Steel plans to reduce debt levels by over $1bn and increase capex to complete the capacity expansion of its Kalinganagar plant to 5mn mt per year.
($1=Rs74.4)