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Tata Steel's raw-material costs to rise by US $1bn in FY2011
Tata Steel announced that its raw-material costs are likely to increase to US $7bn (+14.3%
yoy) in FY2011 due to higher prices of key inputs, iron ore and coking coal. Coking coal
prices have risen to over US $300/tonne due to supply shortage on account of floods in
Queensland (which contributes over 60% of coal exports from Australia). Also, spot
international iron ore prices have risen significantly to over US $180/tonne on the back of
higher demand from China. While Tata Steel’s India operations enjoy a high level of
integration, its European operations are not integrated. Nevertheless, we believe steel
prices will rise in the short-to-medium term as a result of cost push. We maintain Buy on
the stock with a target price of `747.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tata Steel's raw-material costs to rise by US $1bn in FY2011
Tata Steel announced that its raw-material costs are likely to increase to US $7bn (+14.3%
yoy) in FY2011 due to higher prices of key inputs, iron ore and coking coal. Coking coal
prices have risen to over US $300/tonne due to supply shortage on account of floods in
Queensland (which contributes over 60% of coal exports from Australia). Also, spot
international iron ore prices have risen significantly to over US $180/tonne on the back of
higher demand from China. While Tata Steel’s India operations enjoy a high level of
integration, its European operations are not integrated. Nevertheless, we believe steel
prices will rise in the short-to-medium term as a result of cost push. We maintain Buy on
the stock with a target price of `747.
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