Tata Steel India reported a net loss of Rs563 crore ($74.55mn) in Q4 against a net profit of Rs2,309 crore reported in the prior year quarter. Tata Steel India includes Tata Steel standalone, Tata Steel BSL and Tata Steel Long Products.
Tata Steel India’s steel production climbed 6pc in Q4 (Jan-March) to 4.73mn mt from 4.48mn mt produced in the previous year. Steel deliveries fell by 15pc to 4.03mn mt in Q4 from the year prior resulting in the company making losses in the last fiscal quarter ending March.
The company’s consolidated steel production rose by 2pc in Q4 to 7.37mn mt from the previous fiscal. Tata Steel consolidated figures include, crude steel production in India and liquid steel for Europe.
Tata Steel’s upstream steelmaking operations have ramped up and are currently operating at 80pc capacity utilization levels, post the phased removal of lockdown restrictions. The company’s downstream activities have recently reopened and are gradually ramping up operations. There are signs of early recovery in demand for steel on the back of spending in infrastructure and demand from rural background in India.
Tata Steel’s production rose by 8pc to 18.2mn mt and sales grew by 4pc to 16.97mn mt in the fiscal year 2020 from the prior year with ramp-up at Tata Steel BSL and with the acquisition of Usha Martin’s steel business by Tata Steel Long.
Steel deliveries in India fell by 4pc to 16.97mn mt in FY20 even though in Q4 steel deliveries fell by 17pc to 4.03mn mt owing to nationwide lockdown post March 20.
Tata Steel BSL reported its best-ever sales at 4.14mn mt and production at 4.46mn mt due to higher capacity utilization, improved maintenance practices and marketing synergies.
Tata Steel Long Products acquired steel making facility of Usha Martin during the year resulting in high crude steel production of 0.58mn mt in FY20 while deliveries stood at 0.51 mn mt.
Liquid steel production declined to 10.26mn mt in FY20, while in Q4, it rose by 5pc from the prior quarter to 2.64mn mt. Deliveries fell by 4pc t0 9.29mn mt in FY20 on the back of weakness in the European economic activities. Deliveries in Q4 jumped 2pc to 2.39mn mt from the previous quarter amid COVID-19 crisis.
Tata Steel Europe launched 22 new products in FY20. Of them, 10 were introduced in Q4 comprising of new automotive body panel steel allowing improved paint finishes, nickel-plated steel for use in car lighting systems and hot-formed structural hollow sections for construction.
Steel demand and capacity utilization
The company stated that COVID-19 had dampened the steel demand as key steel-consuming sectors like automotive and construction were severely affected. Moreover, liquidity crunch in the market, shortage of manpower and logistics constraints resulted in a weak economy. Post March 25, manufacturing activities were severely impacted, despite the steel and mining sector being exempted from lockdown restrictions.
In Q4 consolidated deliveries fell by 13pc to 6.50mn mt from the year prior quarter. In Europe, the COVID-19 outbreak exacerbated the sustained weak steel demand. Tata Steel points out that the share of steel imports to total consumption in the EU countries continued to remain at elevated levels, posing a concern for the company. In 2019, steel demand growth declined and a gradual recovery is expected only in 2021. Tata Steel Europe is operating at 70pc capacity levels, while the demand remains low as automotive and construction sectors continue to be affected severely.