Europe is expected continue to be impacting the performance of Tata Steel in the first quarter of the current fiscal. However, the company expects to benefit in FY13 from restructuring at various locations. Tata Steel management speaking at the Citi India Investors meet said that demand continues to be sluggish in Europe.
Its FY12 performance was impacted by raw material volatility, margin squeeze, inventory write-downs and production problems at Port Talbot and the Netherlands. Port Talbot is expected to improve in the second half of the current fiscal.
For FY13 Tata Steel expects to touch volumes of 14 million tonnes, which will be aided an expansion in India of 2.9 million tonnes. India’s capacity is expected to touch 10.7 million tonnes by FY13. Its 3 million tonne Greenfield project in Orissa is expected to be ready by 2014 end.
Tata Steel is focusing on securing its raw material. While captive iron ore will continue to be consumed fully, the company is looking at enhancing its coking coal supplies. Mozambique operations are expected to start soon as railway sidings and a port have been commissioned. The company is targeting to produce 850,000 tonnes of coking coal and 200,000 tonnes of thermal coal in FY13 which will be increased to 1.5 million tonne of coking coal and 0.4 million tonne of thermal coal in FY14.
Direct Shipping Ore project in Canada is expected to start operations in fourth quarter of FY13. Initial production will be two million tonnes per annum which will be ramped up to four million tonnes.
For its Asian operations, which have been affected up prices of scrap steel, Tata Steel management says that it will benefit from better product mix and identification of alternate sources of input feed. Singapore it says is benefiting from infrastructure and construction demand and Thailand is witnessing demand from post flood reconstruction demand.