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Tata Steel VP says sector will suffer loss this year

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(Globalpost/GlobalPost)

The global steel industry will probably suffer an overall loss this year because demand is not strong enough to boost prices, the vice president of Indian giant Tata Steel told AFP Thursday.

Balasubramanian Muthuraman forecast on the sidelines of an Indian-Breton business forum in Rennes, Brittany, that Tata Steel India "will make good profits" before adding: "But it is not the case of the world steel industry."

Asked if he expected the global steel sector to suffer a loss, Muthuraman said simply: "Yes."

"Steel companies will probably find it difficult this year from the point of view of generating margins because the steel demand is not strong enough to pull steel prices up," he explained.

The Tata Steel executive also forecast continued consolidation in the steel sector, saying that concentration of companies "is a natural phenomenon, it will continue to happen. There are too many steel companies around the world."

Tata itself rose towards the top of the global rankings via its acquisition of Anglo-Dutch rival Corus in 2007.

Muthuraman predicted that many other Indian steel companies would turn a profit this year as well but underscored that "raw materials prices are high today, this doesn't leave enough margin for the steel companies and that situation will continue for maybe two or three years."

Tata Steel expects its own global output to gain three to four percent this year, owing mainly to demand from China, where he anticipated an overall production increase of seven to eight percent.

In India, output should expand by five to six percent, while in the United States it could edge up by one to two percent, said Muthuraman.

He felt that European output would stagnate however.

Tata Steel is a unit of the Indian conglomerate Tata, which employs more than 400,000 people around the world and posted sales in its most recent fiscal year of just over $100 billion.

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http://www.globalpost.com/dispatch/news/afp/130328/tata-steel-vp-says-sector-will-suffer-loss-year