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Tata Steel: Inherent demand to help steel overcome hurdles
2019-01-07

Jan. 7, 2019 - Mr Koushik Chatterjee, executive director and chief financial officer of Tata Steel Ltd, told Sambit Saha of The Telegraph that a series of price cuts along with international headwinds have taken the sheen off steel but the inherent demand of the alloy remains robust. He said “Steel is a late cycle play. We are seeing price softening because of various reasons as some of the user industries are facing headwinds across the globe. Domestic hot rolled steel prices in China, the biggest influencer in global steel, decreased 19% YoY, while Indian steel prices have increased about 8% during the same time. But China PMI at 49.4 indicates the country is technically in an economic contraction zone and expectation is high that there will be policy easing to ensure growth. Moreover, we are neither seeing a structural demand collapse like 2009 post the financial crisis nor a huge supply glut in the seaborne market like 2015-16. Hence, what we are seeing is normalization from the peak stimulus fuelled growth. Also higher production during pre-winter closing is playing out from an inventory liquidation point of view.”



He also said “That the raw material prices are stable gives a clear indication that the steel cycle will be range bound over the medium term though there may be mini cycles with shorter peak trough duration.”
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