No single player controls prices: Tata Steel on CCI investigation report

Tata Steel says steel prices move in tandem globally as a commodity, rejects collusion claims, and flags cost pressures and improving demand outlook post Q3FY26

From earnings outlook and steel prices, to the Competition Commission of India (CCI) probe report on steel price collusion, Tata Steel Managing Director and CEO T V Narendran and Executive Director and Chief Financial Officer Koushik Chatterjee discuss a range of issues following the company’s third quarter performance in a video interview with Ishita Ayan Dutt. Edited excerpts:

 

Tata Steel’s net profit zoomed 723 per cent year-on-year (Y-o-Y) but was down sequentially. What is the outlook for Q4?

 

Narendran: Domestic steel prices in October-November were the lowest in the past five years. It started changing in December. The impact of that was felt in the realisations.

 

The Y-o-Y performance was driven by better volumes, cost takeouts, and the continued turnaround in the Netherlands. The UK improved on a nine-month comparison, but not Q3 (Y-o-Y) –– so there is work to be done there.

 

In India, volumes are picking up with the ramp-up in Kalinganagar and the product-mix is getting better with the commissioning of the cold rolling mill and galvanising lines. The combi mill in Jamshedpur has started.

 

So we continue to build volumes in the very high-end sectors.

 

Steel prices have rebound from multi-year lows. Is the uptrend likely to hold?

 

Narendran: Till November, domestic steel prices were at a discount to landed import. This is reflective of the fact that while demand was growing, more supply came into the market.

 

Export markets were not an option because prices were low. But slowly the demand growth caught up with supply. Pockets of export markets opened up. So there’s better balance and domestic prices are at a bit of a premium to landed imports. 

 

Also, since November coking coal prices have gone up by at least $50 a tonne. Some of that impact will be felt in Q4, but more of it in Q1 of next year. So there's no motivation for steel companies to drop prices because costs are going up. And across sectors, we are seeing a pickup in volumes, both in rural and urban markets.

 

There are allegations that steel firms, including Tata Steel, colluded on pricing. How would you respond to it?

 

Narendran: The Director General (DG) has done some investigation and come to some conclusions. We got some redacted documents, now we have the full documents. We will study it and make our submissions to the CCI.

 

As we stated, we don't do anything which is illegal. The issue, according to the report, is about steel prices going up together – but that's how commodity markets work. No single player controls steel prices.

 

In the markets, steel prices are published every day. We feel it's a transparent market, where prices move up and down globally, not just in India, and on a daily basis.

 

It’s a commodity in that sense of the term, so there is no room for arbitrage – if someone increases prices, others will also increase. Otherwise the middleman will make the money.

 

In Europe, CBAM has come into force. Will it be a reset year in terms of prices?

 

Narendran: In Europe – the continent, not the UK – prices will now get reset. Traditionally, domestic prices in India were typically $100 more than domestic prices in China; prices in Europe were $100 more than in India. And the US price was $100 more than Europe.

 

But now, the US price is $300 higher than Europe. And Europe is actually coming closer to Asian prices. That will now correct – Europe will move closer to US prices.

 

You have been in discussion for the recalibration of quotas in the UK. What is the current status?

 

Narendran: We are told it will happen soon. The UK government is also feeling the pain because they are operating some of the assets in the UK.

 

Chatterjee: There are a few things that they are to do. As immediate trade neighbours the UK-EU trade has to get on the same level of reciprocity. Exports from the UK to the EU should be without any tariffs, which was the case earlier. Second is aligning the quotas relating to non-EU countries in the same way as the EU has done. The third part is the fungibility between the UK and EU, not just on the tariff point but also the melt-and-pour conditions. Fourth, scrap is a strategic raw material for the UK – it should be value added in the UK rather than allowed as free exports. 

 

Will the US tariff continue to weigh on Tata Steel Netherlands? 

Narendran: It will, because almost 10 per cent of our deliveries out of the Netherlands used to go to the US. The volumes will be less – maybe half of what it has been in the previous years.

  Some of those steels can't be sold in the European market at the same grade. So there is volume and product mix impact.

 

Chatterjee: It is looking at newer markets like Latin America and West Asia, which have high-packaging consumption. The realisations are not as high as the US, but they are higher compared to others. The mix will get affected as it got in the last quarter. But we are looking at mitigations on different products, product mix and markets for the same products.

 

You have geopolitical headwinds, there are cheap imports globally and pressure to decarbonise. How challenging is it for the steel industry right now?

 

Narendran: I think it's always been challenging – this industry has always been geopolitically plugged in on trade issues and policy matters. It's a highly regulated value chain from mining to steel.

 

But the volatility has increased. Tata Steel operates across geographies – the objective is to make each geography self-sufficient in more ways than one. We want to make ourselves structurally less vulnerable to policy and trade actions by different geographies.

 

Chatterjee: Managing the volatility is most critical given the volatility around currencies, tariffs and even input costs. We essentially push the value driver more so that we can effectively expand our margins and profitability. That's the way in which the steel industry generally works.