Tata Steel eyes better H2FY20 on the back of tax benefits, festive season

The government’s proposed tax cuts combined with an uptick in consumption during the festive season would improve the demand situation in the second half of the fiscal year 2019-2020, said TV Narendran, MD of Tata Steel.

The corporate tax rate decision was very positive and in line with what the industry has been talking about, he said.

“It helps companies like us who are investing a lot currently in India because we also have the pressure to deleverage. So actions like this help us in that context,” Narendran added.

Besides tax benefits and festive season, Narendran said the government’s spending on infrastructure will also boost earnings. “We also hope that the infrastructure spend that the government has been talking about will start translating into money flows on the ground so that should help us,” he said.

Compared to South-East Asia, the Middle East or Europe, India has been a big price setter as the country has been exporting a fair amount of steel, said Narendran.

“So if things pick up in India, we believe that steel prices globally can also be positively impacted – microeconomic activity, various governments are taking different steps and we hope we will see the impact of those actions across the world,” he further mentioned.

Tata Steel Q1 Net Profit Crashes.

With global steel prices nosediving while production costs rise, Tata Steel, the country’s largest private steel maker, reported net profit of Rs. 702 crore in the June 2019 quarter, falling 63% year-on-year. The company had reported consolidated net profit of Rs. 1934 crore in the year-ago period. Consolidated revenue from operations remained flat in the quarter, at Rs. 35,382.16 crore.

For India, the company reported standalone net profit of Rs. 1567 crore, 15% lower than the Rs. 1856 crore it reported last year. In India, steel prices declined as subdued economic activity, seasonal slowdown and liquidity issues weighed on domestic consumption. Higher net imports further exacerbated the demand supply balance.

The company reported production of 7.15 MMT in the quarter, with India accounting for 4.5 MMT, higher than the 6.45 MMT and 3.64 MMT respectively reported in the same period last year. EBIDTA in its India business fell 4.71% to Rs. 5117 crore in the quarter, from Rs. 5370 crore in Q1FY19. EBITDA/tonne of steel fell to 12,908 from 16,068 in the quarter, while for the consolidated figures crashed from Rs. 11,740 crore to Rs. 8725 crore.

Tata Steel completes acquisition of Bhushan Energy Ltd.

Tata Steel on Saturday announced it had completed the acquisition of debt-ridden Bhushan Energy Ltd.

The announcement came after the National Company Law Tribunal (NCLT) approved the resolution plan of Tata Steel to acquire Bhushan Energy for around Rs.800 crore.

Pursuant to the acquisition, the company holds 99.99% of the total equity share capital of BEL. Bhushan Energy was a subsidiary of Bhushan Steel Ltd, which was also taken over by Tata Steel last year in May, and later renamed as Tata Steel BSL Ltd.

Tata Steel had offered Rs.35,200 crore in cash to acquire Bhushan Steel, besides Rs.1,200 crore to creditors and convert the remaining debt owed to banks to equity.Incorporated in 2005, Bhushan Energy is based in Dhenkanal, Odisha.

STEEL PRICES UNDER IMMENSE PRESSURE

Despite the mills’ best efforts, steel prices have been unable to gain much traction so far in 2019. Price increase announcements of $40/ton in January and February yielded partial and apparently temporary gains for steelmakers. The prices of all flat-rolled steel products are now well below where they were at the beginning of the year, which may be good news for fabricators and other steel users, but is not-so-good news for steel producers and distributors that have seen their margins and the value of their inventories erode.

SMU tracks steel prices each week and publishes its SMU Price Momentum Indicator, which signals whether steel prices are more likely to move up, down, or sideways in the coming 30 days. Currently, SMU’s market momentum is lower for hot-rolled and plate products and neutral for cold-rolled and galvanized.

Mill price increases cannot succeed without the cooperation of distributors. They are on the front lines in the spot market, and it’s their day-to-day decisions about whether to deal or hold the line that ultimately translate into price changes. SMU’s latest survey data suggests that support for higher prices is waning among service centers. About 90 percent of service center executives responding to SMU’s latest poll said they are having difficulty passing along higher prices to their customers.

In its twice-monthly survey, SMU asks manufacturers if they are seeing higher prices from service centers. In mid-March, around 40 percent of respondents said their service center suppliers were seeking higher prices. In the latest data, that figure had declined to 17 percent.

Medium Carbon Steel Strips.

Meduim Carbon Steels are similar to low carbon steel except that the carbon ranges from 0.30 to 0.60% & the manganese from 0.50 to 1.65%. Increasing the carbon content is approximately 0.5% with an accompanying increase in manganese allows medium carbon steels to be used in the quenched & tempered conditions. This steels are of particular importance because of unique combination of strength & toughness after heat treat treatment.

For more information, visit us at, www.btstrips.com

Spehrodization of High Carbon Steel Strips.

Spheroidite forms when carbon steel is heated to approximately 700 °C for over 30 hours. Spheroidite can form at lower temperatures but the time needed drastically increases, as this is a diffusion-controlled process. The result is a structure of rods or spheres of cementite within primary structure (ferrite or pearlite, depending on which side of the eutectoid you are on). The purpose is to soften higher carbon steels and allow more formability. This is the softest and most ductile form of steel. The image to the right shows where spheroidizing usually occurs.

Steel prices increasing rapidly.

Steel prices in India may go up for the third time in a month – a rare instance -as companies pass on the increase in iron ore rates.

According to sources, the third hike may take place on March 1. The increase will be of Rs 1,000 a ton, taking the total increase within a span of 30 days to Rs 2,750 a ton. The latest round will take price of hot rolled steel to Rs 44,200 a ton.

“Such an increase has rarely happened, it hasn’t taken place in the last eight years,” an industry official said.

Prices were hiked, by Rs 750 a ton, for the first time in the first week of February. The second increase, of Rs 1,000 a ton, came in the third week of the month.

The latest increase in steel prices comes after three consecutive months of softening rates in India, and the world over. Since November, prices had crashed, especially because of the China factor.

Demand in China, the world’s largest steel market, has softened since November, even though production has also been cut.

But an accident in a Brazilian iron ore mine owned by Vale SA, the world’s largest producer, pushed up prices of the raw material. According to reports, the accident in a dam will impact about 70 million tons of iron ore production.

This has led to an increase in steel prices in the global market.

JSW Steel set to acquire Bhushan Power & Steel Ltd.

Tuesday went procedurally a step closer to acquiring an asset in bankruptcy-induced ownership change after the administrator overseeing the sale of Bhushan Power and Steel issued a letter of intent (LoI) in favour of India’s biggest maker of the alloy.

JSW Steel had made a Rs 19,650-crore offer, which included upfront payment of Rs 19,300 crore, with another Rs 350 crore earmarked for operational creditors, according to sources close to the development. After JSW Steel accepts the LoI, the resolution professional will submit JSW Steel’s plan to the National Company Law Tribunal (NCLT) for its approval.

In this resolution case, JSW Steel came from behind and bettered its initial bid to trump Tata Steel’s Rs 17,000-crore offer. The Sanjay Singal-owned company has Rs 47,000 crore of debt. While JSW had earlier acquired the one million tonne Monnet Ispat for Rs 2,875 crore jointly with Aion Investments, Bhushan Power and Steel is bigger with a 3.5 million tonne capacity. If JSW Steel is successful, this acquisition would also compensate for JSW Steel’s failed bid for Bhushan Steel Ltd. (now renamed Tata Steel BSL), which went to the Tatas for Rs 35,200 crore.

Spheroidizing of carbon steel.

Spheroidite forms when carbon steel is heated to approximately 700 °C for over 30 hours. Spheroidite can form at lower temperatures but the time needed drastically increases, as this is a diffusion-controlled process. The result is a structure of rods or spheres of cementite within primary structure (ferrite or pearlite, depending on which side of the eutectoid you are on). The purpose is to soften higher carbon steels and allow more formability. This is the softest and most ductile form of steel. The image to the right shows where spheroidizing usually occurs.

As rolled hard strips – Special Temper.

These are basically as rolled hard steel strip. To achieve a desired hardness, an annealed material of suitable thickness is taken and rolled down to the required thickness, to achieve that required hardness. After rolling, the material is pinch passed and final annealing is not required. To choose the correct thickness (for reduction to the desired thickness) is a matter of expertise.

Grades: This strip is available in low, medium & high carbon grades.

Applications: It is suitable for components where formability is limited. It saves the extra annealing cost. The strip is directly punched & formed and if required sent for heat treatment.