Mumbai: “Tata Steel Ltd, the world’s no. 8 producer of the alloy, sees a slow recovery at its European unit Corus as the western economies limp out of a recession,” Koushik Chatterjee, chief financial officer of the group firm said on Wednesday.
Corus, Europe’s second biggest steelmaker, announced in December plans to close sites in northeast England and a further 1,700 job losses, having already cut 4,500 British jobs earlier in 2009.
“The pace of recovery in western Europe and the U.S. is much slower than in China and India,” Chatterjee told television channel ET Now.
“There has been a recovery from what it was 9-10 months ago, but the recovery rate is much slower than in Asian economies and I think that’s how it will pan out over the year,” he added.
On Tuesday, Tata Steel said that sales from its Indian operations, which account for a quarter of the group’s global capacity, rose 73% in December, and overall sales for the December quarter rose 49% to 1.60 million tonnes.
By comparison, Corus has struggled as the global downturn has hit demand from key sectors such as construction and automakers and is operating at about 80% of its capacity in Europe.
Chatterjee expects utilisation levels to improve only after demand picks up in the next fiscal year.
“Going forward, from April onwards we would like to see demand coming back slowly,” he said.
Chatterjee expects steel prices to remain stable on robust demand and as mills await annual price negotiation with miners.
Tata Steel has access to cheaper iron ore from its own mines, but is working on securing raw material sources to save costs.
“The firm, which owns a coal mine in Mozambique and an iron ore mine in Canada, will concentrate on getting these projects on-stream in the next couple of years,” Chatterjee said.
“These are large projects and our concentration is in getting these projects on stream in the next one year or two years,” he added.
At 0803 GMT, shares were down 0.92% at Rs643 in choppy Mumbai trading, with the 30-share benchmark BSE index inching up 0.08% at 17,701.21 points.