The decision of the Chinese government to withdraw an export sop of around 9% on hot rolled coils (HRC) from July 1 and higher domestic purchases at stable prices are likely to improve Tata Steel?s sales in the second quarter.
The company’s first quarter sales stood at 1.396 million tonne (mt), almost the same when compared with the year-ago period. Weak market sentiments in the commercial segment of flat products and excessive imports of HRC from China were the primary reasons behind the stagnation, it said in a statement on Tuesday while announcing the Q1 figures.
Talking to FE here late on Tuesday evening, Tata Steel managing director HM Nerurkar said the entry of cheaper HRC from China was one of the reasons behind stagnation in sales. Since China has now (from July 1) withdrawn the sop, Nerurkar said, ?The undue advantage what people were getting will now go away.?
One of the reasons behind flat sales was that a section of consumers stayed away from buying anticipating that prices would soften in future, the managing director said. ?Whenever there is volatility ? prices go up and then come down ? there is a problem (as sales stagnate); now it is all right; and I hope the next quarter will be better as consumption (in the country) is high,? said Nerurkar.
Nerurkar is bullish on the steel major?s 6-mtpa greenfield project at Kalinganagar in Orissa. ?Quite a good progress has been made, as almost three-fourth of the land is cleared. We will start the project as soon as the monsoon is over.? Though the land has been handed over to the company, people residing there ?were not so happy?. But the company recently spoke to them and ?they are now confident that we will look after them?, he said.
On south-east Asian operations, the MD said, ?Our Singapore operations are doing quite well. Thailand is a worry because of political instability and I hope the situation soon becomes normal. The government has taken steps, but because of the unrest, steel offtake was a bit low (in Q1).”
Tata Steel acquired Singapore-based 2-mt NatSteel (now NatSteel Asia) in 2004 and Thailand’s 1.7-mt Millennium Steel (now Tata Steel Thailand) in 2005. Nerurkar, however, seemed a bit concerned over the euro zone crisis ? ?In Europe, demand is slightly low, but it is holding on.?