Indian steel makers in a sweet spot on rising prices amid China supply curbs
For domestic steel manufacturers, the going has been good for a while now. Not only demand remains favourable, steel prices have also been north bound providing a supportive environment.
China, the largest consumer of the commodity, is facing supply curbs which bode well for demand and prices, globally. Limited exports out of China, as Beijing targets zero emissions over time, will lower the risks of cheap steel imports into India and will likely boost capacity utilisations across domestic steel manufacturers.
“Chinese supply restrictions and ex-China capital starvations have finally set the stage for capacity shortfalls in steel,” say analysts at Ambit Capital Private Limited. “The Chinese steel costs curve is likely to increase on supply restrictions, a higher share of EAF output (20% by CY25 from 12% in CY20) and higher power tariff.”
Tata Steel’s deleveraging accelerates; operating performance strong in Q3
A Tata Steel sign is seen outside their plant in Scunthorpe northern England, October 15, 2014. REUTERS/Phil Noble/Files
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Ebitda loss also widened on the back of reversal of wage support and higher carbon provisions
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Tata Steel Ltd’s December quarter (Q3) earnings have many positives. Consolidated earnings before interest, tax, depreciation and amortization (Ebitda) was at a record high, aided by favourable demand and pricing environment. Additionally, debt reduction with improved cash flows is helpful.
In Q3, consolidated Ebitda grew 2.6 times year-on-year and also improved 1.53 times over Q2. This was despite higher operating losses in European operations and a decline in domestic volumes sequentially. Higher steel realizations and integrated domestic operations accrued benefits as product mix improved. Reduced exports and lower opening inventory at the st