Coronavirus drags Tata Steel production and sales volume in Q1FY21

June sees improvement in sales, utilisation up to 80 per cent

Mobility restrictions and weak consumer sentiment due to Covid-19 outbreak dragged Tata Steel's production and sales volume in the first quarter of FY21.

Tata Steel India recorded a 26.26 per cent drop in sales volumes year-on-year and 27.54 per cent quarter-on-quarter to 2.92 million tonnes in Q1FY21. The drop in production was 33.54 per cent year-on-year and 36.78 per cent quarter-on-quarter to 2.99 million tonnes.

The company said that overall 1QFY21 production and sales volumes were lower as the outbreak of Covid-19 and ensuing mobility restrictions severely impacted industrial activity and consumer sentiment across all geographies.

The drop in production and sales volume in Europe, however, were lower. Sales volume were down by 14.15 per cent year-on-year and 18.82 per cent quarter-on-quarter to 1.94 million tonnes. 

Production volume declined 19.24 per cent year-on-year and 18.93 per cent quarter-on-quarter to 2.14 million tonnes.

Tata Steel said that while April and May sales were lower, sales improved significantly in June as economic activity resumed in India. "With the continued opening of the economy and the improvement in domestic demand, the proportion of domestic sales will increase from Q2," the company statement read.

Utilization levels have been ramped up to around 80 per cent level by the end of June. Downstream facilities have also been restarted and are being ramped up progressively, the company said.

 

Most steel companies have seen an improvement in sales in June. Steel Authority of India Ltd (SAIL) achieved its highest ever June month sales with domestic and export sales at 12.77 lakh tonnes, a jump of more than 18 per cent over the corresponding period last year.

Jindal Steel & Power recorded its highest ever monthly sales (including pig iron) production of 626,000 tonnes in June 2020. Quarter-on-quarter, consolidated steel sales were up by seven per cent to 2.07 million tonnes.

Tata Steel said in its production and sales volume commentary that while urban markets were showing slow recovery, retail sales, especially in rural markets, were seeing an improvement in demand.

"During this quarter, we launched two new coated brands “GalvaRoS” and “Colornova” to meet the evolving needs of our customers. We initiated supplies to National Capital Region Transport Corporation Project, a landmark project.  We have also received approval for API X60 & X70 grades for supplies to Oil & Gas segment," the company said.

The company said that it was closely monitoring the situation and would take appropriate actions as per the directions issued by regulatory authorities from time to time keeping in view the health and safety of its employees and the community and the interests of its customers and other stakeholders. It also said that it would stay focused on managing costs and working capital and ensure adequate liquidity.