• Global business confidence has dipped sharply in recent months amidst broader economic weakness and the uncertainty around the ongoing US-China trade conflict, which has had an adverse effect on investment decisions, capex spend and trade flows. Consequently, steel prices across much geography declined in 1QFY20. This coincided with a sharp rise in iron ore prices due to supply disruptions and elevated coking coal costs. As a result, market spreads for steel producers globally have been affected.

• In India, the liquidity issues in the NBFC and banking sector along with rural stress have negatively impacted sentiments and overall economic activities including domestic consumption. Despite this, Tata Steel India’s 1QFY20 production increased by 20%YoY with consolidation of Tata Steel BSL for the full quarter and higher capacity utilization at both Tata Steel Standalone and Tata Steel BSL. 1Q FY20 sales volume was improved by 16% YoY primarily with consolidation of Tata Steel BSL for full quarter.

• In Europe, the steel industry is facing significant headwinds in terms of lower economic growth and trade flow uncertainty that is impacting steel consuming products. Tata Steel Europe’s 1QFY20 production was impacted by planned shutdowns and unplanned outages during the quarter. This coupled with sluggish demand affected the sales volume in 1QFY20.

• The resumption of trade talks between U.S. and China and the recent Union Budget announcements in India to resolve some of the liquidity issues are expected to trigger an improvement in business sentiment globally and in India. This is expected to translate into a stronger business performance in second half of the financial year.

All Figures are in million tons

Notes: 1. Figures for Tata Steel India includes Tata Steel Standalone and Tata Steel BSL from May 18, 2018 without eliminating inter-company transactions. 2. Production Numbers: India - Crude Steel Production; Europe - Liquid Steel Production; South-East Asia - Saleable Steel Production.