Tata Steel loses almost a third of its share value in 3 months as coronavirus chokes inputs

• The stocks of Tata Steel stood at ₹293 today (March 17) as the markets opened higher after yesterday's crash.
• The company’s share price dipped to a 3-month low — from ₹421.05 to ₹286.8 on March 12.
  
• Tata Steel, which sources materials like refractory, steel mill rolls, electrodes and manganese from China, is eyeing alternate markets like Brazil and Turkey.

Just when the demand for metal was slowing picking up pace, the outbreak of coronavirus disrupted global supply chains. As a result, the stocks of the steel conglomerate Tata Steel stood at ₹293 today (March 17) as the markets opened higher after yesterday’s crash. The company’s share price dipped to a 3-month low — from ₹421.05 to ₹286.8 on March 12.


This is a 31.8% slump in the stock price in the last three months as the markets across the globe felt the jitters of the Coronavirus outbreak. Along with trade, travel came to a grinding halt.

Supply and sale affected

Tata Steel, which sources materials like refractory, steel mill rolls, electrodes and manganese from China, is bearing the brunt as the country is the epicenter of the outbreak. While the company is looking to place orders in alternate markets like Brazil and Turkey, it would add to its costs.

“We have already carried out a risk assessment and are comfortable till April. Our operations have not been affected," T V Narendran, CEO & MD of Tata Steel said during the CII’s annual meeting.

On the other hand, the steel prices are also affected and fell to ₹37,000 a tonne from ₹46,000 per tonne last year. In November 2019 when Coronavirus was first reported, prices slipped to as low as ₹32,250 a tonne.

Stocks crashed by 20% in last 15 days

The stocks crashed by 20% in the last 15 days, affected by supplies from the markets in China.

What is more to the worry for the steel market is that almost 30 million inventory is piling up in China. And it is yet to be seen if that volume will be exported or supplied within the home market. "If you leave the virus out, we were seeing green shoots in the economy. Things were picking up in multiple areas," Narendran said.

However, it might be tougher to realise these green shoots as the country is coming to a standstill. Tata Steel, on Monday (March 16) advised its officials to work from home and avoid unnecessary gatherings. The company imposed travel restrictions for employees — both international and domestic business travel.

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