Need 10 mt imported coal from single source, says Nerurkar
Stung by steep increases in raw material prices in international market, largely caused by the emergence of quarterly contracts in place of earlier annual contracts, Tata Steel is re-negotiating prices of coal and iron ore with some of the international suppliers.
“In the current fiscal, we'll need two million tonnes (mt) of imported coal for India operation and another eight mt for Tata Steel Europe and the entire quantity is to be obtained from the single source,” Managing Director Nerurkar said.
“An estimated 19-20 mt of iron ore, all imported, will be needed for Tata Steel Europe”.
Tata Steel’s India operations at Jamshedpur (seven million tonnes) met 55 per cent of coal requirement by way of imports. For iron ore, it was self-sufficient. However, Tata Steel Europe (17 mt) depended entirely on imports for both coal and iron ore, he said.
The raw material prices, as he pointed out, had jumped 80-90 per cent. Coking coal prices increased from $125 to $220 a tonne and iron ore prices from $65 to $110 a tonne.
Asked if Tata Steel would also re-negotiate prices with its customers such as automobiles companies, construction and infrastructure firms, he said any advantage to be obtained on raw material prices would be passed on to the customers.
He conceded that the margin would be under pressure in the current fiscal, especially because the high raw material prices would be accompanied by idle capacity.
Globally, steel output this fiscal would reach the level of production prevalent in 2008. While China alone would account for 50 per cent of the production, the output of the rest of the world would still be at the 2001 level. India’s steel sector, however, was expected to grow 10 per cent in 2010-11, he said.
Nerurkar refused to respond to the Steel Minister’s comment that domestic steel producers were forming a cartel, except saying in a free-market economy, there was hardly any scope for a cartel.
The work on Kalinganagar project in Orissa had started, slowly though, he said but pointed out that the progress in respect of projects in Chhattisgarh and Jharkhand was slow.
As of now, there was no proposal to expand
the capacity of the Jamshedpur plant from the
targeted 10 mt.
In 2009-10, the company achieved 18 per cent growth in sales at 6.17 mt driven by the rise in demand from automobiles, construction and infrastructure sector. “Our market share in automobiles is 42 per cent”, he said. The proper supply chain management also helped.
“Our major customers are located 1,500-2,000 km away from Jamshedpur and yet, the level of compliance was 95 per cent and in past six months, there was not a single delivery failure,” he added.
The orders worth Rs 13,000 crore had been placed out of the Rs 15,000-crore capital expenditure being undertaken in Jamshedpur plant to set up a blast furnace (3 mtpa), pellet plant (6 mtpa), two stamp-charged coke-oven batteries of 0.7 mtpa each , raw material handling facilities, thick slab casting and rolling mill of 2.4 mtpa and environment protection measures.
All this would be completed in the 2011-12.
Stung by steep increases in raw material prices in international market, largely caused by the emergence of quarterly contracts in place of earlier annual contracts, Tata Steel is re-negotiating prices of coal and iron ore with some of the international suppliers.
“In the current fiscal, we'll need two million tonnes (mt) of imported coal for India operation and another eight mt for Tata Steel Europe and the entire quantity is to be obtained from the single source,” Managing Director Nerurkar said.
“An estimated 19-20 mt of iron ore, all imported, will be needed for Tata Steel Europe”.
Tata Steel’s India operations at Jamshedpur (seven million tonnes) met 55 per cent of coal requirement by way of imports. For iron ore, it was self-sufficient. However, Tata Steel Europe (17 mt) depended entirely on imports for both coal and iron ore, he said.
The raw material prices, as he pointed out, had jumped 80-90 per cent. Coking coal prices increased from $125 to $220 a tonne and iron ore prices from $65 to $110 a tonne.
Asked if Tata Steel would also re-negotiate prices with its customers such as automobiles companies, construction and infrastructure firms, he said any advantage to be obtained on raw material prices would be passed on to the customers.
He conceded that the margin would be under pressure in the current fiscal, especially because the high raw material prices would be accompanied by idle capacity.
Globally, steel output this fiscal would reach the level of production prevalent in 2008. While China alone would account for 50 per cent of the production, the output of the rest of the world would still be at the 2001 level. India’s steel sector, however, was expected to grow 10 per cent in 2010-11, he said.
Nerurkar refused to respond to the Steel Minister’s comment that domestic steel producers were forming a cartel, except saying in a free-market economy, there was hardly any scope for a cartel.
The work on Kalinganagar project in Orissa had started, slowly though, he said but pointed out that the progress in respect of projects in Chhattisgarh and Jharkhand was slow.
As of now, there was no proposal to expand
the capacity of the Jamshedpur plant from the
targeted 10 mt.
In 2009-10, the company achieved 18 per cent growth in sales at 6.17 mt driven by the rise in demand from automobiles, construction and infrastructure sector. “Our market share in automobiles is 42 per cent”, he said. The proper supply chain management also helped.
“Our major customers are located 1,500-2,000 km away from Jamshedpur and yet, the level of compliance was 95 per cent and in past six months, there was not a single delivery failure,” he added.
The orders worth Rs 13,000 crore had been placed out of the Rs 15,000-crore capital expenditure being undertaken in Jamshedpur plant to set up a blast furnace (3 mtpa), pellet plant (6 mtpa), two stamp-charged coke-oven batteries of 0.7 mtpa each , raw material handling facilities, thick slab casting and rolling mill of 2.4 mtpa and environment protection measures.
All this would be completed in the 2011-12.
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