Tata Steel turns volatile after Q3 business update

Tata Steel fell 0.43% to Rs 480.90 after the company announced its operational update for Q3 December 2019 before market hours today, 10 January 2020.

Tata Steel India's production volume rose 1.83% to 4.46 million tons in Q3 December 2019 as against 4.38 million in Q3 December 2018. Production in Europe surged 6.84% to 2.5 million tons in same period.

Tata Steel India's sales jumped 24.42% to 4.84 million tonne in Q3 December 2019. Sales in Europe declined 1.7% to 2.31 million tons on the back of overall slowdown and seasonal weakness.

The company reported that during Q3 December 2019, weakness in GDP growth and industrial output continued across major economies affecting steel demand. Chinese steel demand was buoyant despite higher steel production, the company's exports stabilized at around 5 million tons a month.

Positive developments on the US - China trade talks provided support to global steel demand and thus steel prices.

In Europe, the overall slowdown coupled with seasonal weakness kept steel spreads under pressure as declining steel prices offset the benefit of softness in raw material prices.

Domestic economy remained weak with declining private consumption growth and low investment growth. The company assured that steel prices are expected to improve further with strong retail demand and ongoing restocking demand at the dealers' ends.

Tata Steel Group is among the top global steel companies with an annual crude steel capacity of 33 million tonnes per annum (MnTPA). It is one of the world's most geographically-diversified steel producers, with operations and commercial presence across the world.

On consolidated basis, the steel major reported a 6% rise in net profit to Rs 3,302.31 crore on the back of one time deferred tax gain of Rs 4365.33 crore in Q2 September 2019. Net sales fell 15.77% to Rs 33,953.75 crore during the period under review.

The Tata Steel stock trades above its 20 days and 50 days simple moving average placed at 463.78 and 428.88 respectively. These levels will act as support zones in near term.

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