Tata Steel Europe plans to make a specific push on packaging, automotive and engineering steel products as it lifts its profile as a higher-value products producer in a drive to improve its financial performance.
These will include all differentiated products "including packaging products like Protact, our high and ultra high strength automotive steels, our Magizinc automotive steels, as well as high abrasion resistant steels for the engineering sector," a Tata Steel Europe spokesman told S&P Global Platts Tuesday.
The move comes as part of a restructuring and efficiency-boosting program announced by the company, one of Europe's main flat steel producers, late Monday "to ensure the business can thrive despite severe market headwinds which have led to a sharp decline in profitability."
The company aims to optimize production processes, supported by the application of big data and advanced analytics, and improve customer focus, it said.
In the first six months of its current financial year, which started in April 2019, Tata Steel Europe reported a drop of 90% in EBITDA to GBP31 million (US$40 million), as prices for some commodity-grade flat rolled steel products fell sharply to multiyear lows, prompting destocking in the European Union markets.
HASN'T GIVEN UP ON EUROPE
Tata Steel Group global CEO T.V. Narendran told reporters in India November 6 that "we've not given up on Europe" despite the market slump. ""Our work in Europe is getting accelerated. We need to work as fast as possible to get cash-positive. ... We've a lot of work to do in Europe. We won't finish in six months."
He was upbeat, however, on European market prices: "We certainly think the downslide has stopped."
Tata Steel Europe's "transformation" program will involve 3,000 job losses out of a total of about 21,500 employees in the region, where the company has major steelmaking sites in the UK and the Netherlands.
Amid speculation on the future of Tata Europe's 3.85 million mt/year integrated mill in Port Talbot, Wales, informed sources affirmed Tuesday that "there are no plans to change" the company's steelmaking configuration.
UK-based steelworkers' union GMB demanded reassurances Tuesday from Tata Steel that there will be no job losses at the mill.
"Massive job losses could be a threat to workers, families and the whole community," GMB said.
Consultations are expected between the company, employees and trade union representatives.
PACE OF PRODUCTION CUTS
A Swiss-based trader said European steel mills had been slow to make production cuts in the EU market, where apparent steel demand will fall 3.1% this year from 2018 levels, according to European steel association Eurofer.
"What is happening now in Tata, I expect will happen soon also in other European mills. This is the result of wrong strategies from the European mills in front to an apparent decline in the steel consumption. ... They should have cut production before."
He also pointed to structural problems in the EU steel sector, where competition rules make it impossible for the mills, which are privately owned, to gain state aid, making it more difficult for regional mills to compete with their Chinese counterparts.
"We saw a similar situation back in 2015 in China, but China reacted helping the mills pumping money from the provinces and coordinating the production cuts," the trader said. "I think that Q4 for the mills will be very bad."
Source: Platts |
