[Ferro-Alloys.com] Tata Steel Europe, the region's third-largest steelmaker, is set to announce a restructuring and cost-cutting plan in the face of weak market demand and continuing competition from imports, a spokesman said Monday.
News of the planned restructuring came two weeks after European steel producers' association Eurofer forecast a 3.1% decline in European apparent steel consumption this year to 158 million mt, the biggest drop since 2012, with amodest upturn glimpsed only from the second quarter of 2020.
Tata Steel Group recently reported a marked fall in its consolidated EBITDA per metric ton of steel produced to Rupee 6,155 ($85.93) for the second quarter of fiscal 2020 (ending March 31, 2020), from Rupee 10,394 for the fourth quarter of fiscal 2019, mainly due to market weakness.
The Financial Times newspaper reported Monday that Tata Steel Europe's turnaround efforts will involve an ambition to slash employment costs by GBP150 million ($194 million) over time, involving job cuts at its main plants in the UK and the Netherlands, as well as savings on raw materials procurement and a focus on selling higher-value types of steel.
Over the past three years, Tata Steel has been spending close to GBP120 million/year maintaining Port Talbot, a 30% increase on investments of previous years, and the life of assets at the 3.85 million mt/year integrated works has been extended by 10 years, the executive said.
However, Tata Steel has sought to sell some of its smaller European assets both in the run-up to its proposed merger with Thyssenkrupp, and following the European Commission's blocking in May of the merger on market competition grounds.
"We expect Tata Steel's Europe business to remain with them over our forecast horizon despite their best efforts to find a buyer in the aftermath of the joint-venture cancellation with thyssenkrupp AG," the agency said. (S&P Global Platts)
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