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Tata Steel Reports Q3 Performance, Status of Teesside Arbitration
01/12/2011 - Tat Steel reports third quarter performance for its Indian, European and South East Asian operations, and provides an update on the status of its ongoing arbitration proceedings with certain off-takers of its Teesside Cast Products Plant.
Tata Steel’s Indian operations completed the third (December) quarter of FY’11 with 1.752 million tonnes of saleable steel production.
Third-quarter deliveries at 1.637 million tonnes were nearly 3% higher compared to the corresponding period of last year and about 1% lower than the previous quarter (Q2 FY’11). The pricing environment in India in the third quarter was mixed, with prices for flat products being marginally lower compared to the second quarter, while prices for some long products increased.
Tata Steel UK Limited, a subsidiary of Tata Steel, has received a partial final award in its favor in an ongoing arbitration proceeding between Tata Steel UK Limited and certain off-takers of its Teesside Cast Products Plant.
The arbitral tribunal amongst other things found that the Off-Takers did not validly terminate their off-take agreements.
The arbitration proceedings, which are being held under the auspices of the ICC International Court of Arbitration, will now move to the next phase of determining the amount of damages.
Tata Steel’s European operations produced 3.7 million tonnes of liquid steel in the third quarter and recorded deliveries of 3.5 million tonnes, nearly 8% lower compared to the corresponding period of last year and nearly 1% lower compared to the deliveries achieved in the previous quarter (Q2 FY’11). While production and deliveries for the quarter were in line with the first half of FY’11, improvements in the financial performance of the first half of FY’11 could not be maintained as higher raw material prices and reduced apparent demand due to seasonal slowdown, amongst other factors, adversely impacted margins at Tata Steel’s European operations.
Tata Steel’s South East Asian operations produced 721 kt in the third quarter, which was approximately 1% lower than the previous quarter, and recorded deliveries of 776 kt, nearly 14% lower compared to the year-ago third quarter and nearly 2% lower than the precious quarter (Q2 FY’11). The South East Asian operations were marginally affected in the third quarter compared to the previous quarter by rising scrap prices and delayed increase in the finished product prices.
On a group-wide basis, the volume of steel products sold by Tata Steel declined marginally compared to the previous quarter (Q2 FY’11). With the pricing environment in the third quarter, Tata Steel expects that net sales for the third quarter will be flat compared to the second quarter. Tata Steel further expects its operating results to decline somewhat in comparison to the second quarter, due primarily to increased raw material prices in the third quarter.
One of the pickling lines at Tata Steel’s IJmuiden plant in the Netherlands suffered a fire on December 27, 2010. The fire was extinguished without any injuries to any employees, and there was no interruption to the iron and steelmaking operations, since the line was not operating at the time of the fire. Although Tata Steel expects customer deliveries to be met by diverting scheduled production to alternative facilities, it has declared force majeure on deliveries of certain strip products from the IJmuiden site.
Production and delivery numbers of the third quarter of FY’11 are provisional and subject to limited audit.
Established in 1907, Tata Steel Group is among the top ten global steel companies with an annual crude steel capacity of over 27 million tonnes per annum. It is one of the world's most geographically-diversified steel producers, with operations in 26 countries and a commercial presence in over 50 countries. The Tata Steel Group, with a turnover of US$ 22.8 billion in FY '10, has approximately 81,000 employees across five continents. The Group’s vision is to be the world’s steel industry benchmark in “Value Creation” and “Corporate Citizenship” through the excellence of its people, its innovative approach and overall conduct. Underpinning this vision is a performance culture committed to aspirational targets, safety and social responsibility, continuous improvement, openness and transparency.
