Tata Steel, which has been sourcing consumables from China, has started placing orders for materials in alternative markets in the wake of coronavirus outbreak in the neighbouring country, a top official said. The company has already undertaken a risk assessment, Tata Steel managing director and chief executive officer T V Narendran said.
"There are few consumables we source from China. We have already carried out a risk assessment and are comfortable till April. Our operations have not been affected," he said on the sidelines of CII's annual regional meeting here on Saturday evening. The company has also placed orders with alternate sources like Brazil and Turkey even price is higher in these markets, he said.
Refractory, steel mill rolls, electrodes and manganese are sourced from China, according to company officials. Speaking about the market situation, Narendran said the steel industry was hoping to reclaim peak prices by September as demand for the metal was recovering, but coronavirus outbreak poses a challenge. He said prices of steel were being pushed up every month and would have continued if the virus scare was not there.
"In March, we pushed up too, but customers are pushing back," he said. After touching a low of Rs 32,250 a tonne in last November, steel prices has reached around Rs 37,000 a tonne now. It still remains lower than last year's peak level of Rs 46,000 a tonne.
About 20-30 million inventory build-up in China remains a concern, he said, adding that it needs to be followed whether the volume would get consumed in the home market or be exported. South East Asian market has reacted the most and prices have dropped there, he said. "If you leave the virus out, we were seeing green shoots in the economy. Things were picking up in multiple areas," Narendran said.
All sectors except auto were showing improvement in terms of demand, he said. Narendran expected the demand from the auto segment will come back as well by September and by then, the response from the launch of BS VI cars would be clear. Auto accounts for 15-16 per cent of steel end-use.