Tata Steel Ltd's domestic production and steel sales volume declined sequentially during the June quarter, as anticipated. Provisional sales volumes at 4.15 million tonnes (MT) were down 11% sequentially as demand weakened across most sectors. The company attributed this to partial lockdowns in some states and temporary shutdowns in a few steel-consuming sectors amid the second wave of the covid-19 pandemic.
To offset the impact, exports were increased to 16% of the total sales versus 11% in 4QFY21, said the company. Exports stood at 0.66 MT, up 33% sequentially, and domestic sales were at 3.49 MT, down 16% sequentially.
Analysts at Motilal Oswal Financial Services highlighted that volume offtake in key business verticals such as auto was down 28% sequentially, though up 7 times on a year-on-year basis. Branded and retail sales were down 18% sequentially, but 112% higher YoY. Industrial products and projects also saw an 11% sequential decline, though sales doubled from those seen in the year-ago quarter.
Tata Steel BSL's sales decline was lower compared to Tata Steel, down 6% QoQ, at 1.12 MT. Analysts believe higher exports offset the decline in domestic volumes. Sales in Tata Steel Europe fell 4.5% sequentially to 2.36 MT. Production improved 2.6% sequentially to 2.73 MT. However, the good news is that the domestic market has been improving since mid-June with easing lockdowns. Analysts expect a sharp recovery in demand moving forward. Even though sales may have been soft, better realisations are set to drive the company’s profitability further during the June quarter.
Domestic hot-rolled coil (HRC) prices were up 20% sequentially after price hikes in the first fortnight of June. The company is an integrated manufacturer with captive supplies of coal and iron ore. The volatility in basic raw material prices of iron-ore thereby does not impact the company.
