Steel industry pinning hope on revival of auto sector by Sept: Tata Steel global CEO, MD TV Narendran

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March 10, 2020 4:15 AM

Closer to India, the prices in the South East Asian markets were under pressure. But there is a 30-million tonne build-up of inventory in China which can determine price movement in the weeks to come.

Tata Steel made a risk assessment just after the outbreak of the virus and planned alternative sourcing of refractories, steel mill rolls and manganese from Brazil and Turkey.Tata Steel made a risk assessment just after the outbreak of the virus and planned alternative sourcing of refractories, steel mill rolls and manganese from Brazil and Turkey.Tata Steel made a risk assessment just after the outbreak of the virus and planned alternative sourcing of refractories, steel mill rolls and manganese from Brazil and Turkey.

The steel sector is expecting the revival of the automobile sector sometime around September this fiscal, which could in turn boost the growth of speciality steel, Tata Steel global CEO and MD TV Narendran has said.

“As much as 15% of steel consumption is from the auto sector, but it is still looking fragile. Leave aside the virus (coronavirus), there are green shoots in the economy. Sectors will continue to be positive. Commercial property is growing strong, but residential’s growth is chequered. September onwards, the cost of vehicles is likely to go up,” Narendran said on the sidelines of a CII session held here recently.

Talking about the outbreak of coronavirus, he said the steel sector globally was not yet largely impacted, but things are likely to pan out in another two-three weeks.

The virus would actually delink the supply chain and many would have to shift their sourcing points from China if the outbreak continues, and many sectors in India are likely to benefit from this, he said, adding that Apple was considering shifting manufacturing to India.

Though Apple was thinking of shifting 10-15% of their manufacturing to India from China in as early as July 2019 in the wake of the US-China trade war, the plan may get intensified with the virus outbreak in China. Apple shifting manufacturing and exports to India by around 15% would help increase India’s overall exports by 8%-10%, he said.

For the Indian steel sector, the Chinese impact was not yet large. Tata Steel made a risk assessment just after the outbreak of the virus and planned alternative sourcing of refractories, steel mill rolls and manganese from Brazil and Turkey. While a few shipments of these alternative sourcing would not effect any cost push, the cost factor would have to be taken into consideration after 20-30 shipments from the new destinations.

The Tatas’ European operations were well on track but there were concerns for South Europe on account of Italy.

Closer to India, the prices in the South East Asian markets were under pressure. But there is a 30-million tonne build-up of inventory in China which can determine price movement in the weeks to come.

“If the inventory is consumed in China itself, nothing much is going to happen in the South East Asian market on the price front. But if the inventory is pushed to the South East Asian markets, a price movement is expected,” Narendran said, adding that steel prices have been moving upwards in the past few months, and during September, it is likely to reach its peak.

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