Tata Steel sees 30-50 per cent fall in input costs in 2009-10

30 January 2009

Tata Steel, the world's sixth largest steelmaker, expects raw material prices to soften by as much as 30-50 per cent in the coming financial year amidst poor offtake.

"I believe prices will come down when the contracts are renegotiated next year,'' Tata Steel managing director B Muthuraman said, adding, ''The way steel prices have come down from the historic high, input costs are also to come down from their historic high."

"I believe they will come down by 30-50 per cent or perhaps in that region in the next year," he said.

In fact, prices of raw materials like iron ore and coal, the two most important raw materials for steel-making, have come down recently amidst declining demand in the West.

"We need to appreciate the fact that steel and inputs to steel follow a certain cycle. Earlier this year, steel companies had the advantage, because steel prices were higher and raw material prices could not catch up with it. But, for the last few months, the situation has been reversing," he said.

Mauthuraman said Tata Steel's raw material consumption went up to Rs1,611.17 crore during the three-month period ended 31 December, compared to Rs902.32 crore in the same period last fiscal.