Tata Steel talks relief package with UK govt amid coronavirus outbreak

Tata Steel Europe's steelmaking sites include Ijmuiden in Netherlands, apart from Port Talbot in Wales.
Tata Steel, UK’s biggest steel producer, is discussing a relief package with the UK government to see it through the crisis caused by the coronavirus pandemic.

Tata Steel Chief Executive Officer and Managing Director T V Narendran said: “Discussions are going on with the government. Can’t share specifics for now.”

UK media reports suggested that the size of the package could be £500 million.

Last week, Stephen Kinnock, Aberavon MP whose constituency includes Port Talbot, said in the House of Commons, the government’s Coronavirus Large Business Interruption Loan Scheme was capped at £50 million, which was only one-tenth of what Tata Steel believes is the cashflow impact on the company over a six-month period.

He later tweeted: “Steel underpins everything from cars to construction, to life-saving equipment for our National Health Service. There can be no post-pandemic economic recovery without steel. The UK government must urgently step up and enable the loan, to solve this temporary cash-flow crisis.”

Steel companies have been facing headwinds since the pandemic as major customers like automobiles have halted production.

While releasing production numbers last week, Tata Steel said that overall European steel demand had declined compared to normal as many customers, including European car manufacturers, had paused production. The utilisation levels were currently around 70 per cent and dispatches were continuing in both the UK and the Netherlands.

In Q4FY20, Tata Steel Europe was able to keep production and sales stable compared to Q3 FY20.
Tata Steel Europe’s sales were at 2.37 million tonnes compared to 2.35 mt in the previous quarter, and 2.57 mt in the year-ago period.

In contrast, Tata Steel India recorded a 17 per cent drop in sales at 4.03 mt compared to the previous quarter, primarily because of logistic issues and lower demand under lockdown. Europe, incidentally, was not under lockdown.

However, Edelweiss Research said that it expected Tata Steel Europe to make losses at an operating level in FY21. “We expect recovery only by Q4FY21,” the company said recently.

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