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Tata Steel, the UK’s largest steel producer, is discussing an aid package with the UK government to overcome the crisis caused by the coronavirus pandemic.
Tata Steel Executive Director and Managing Director T V Narendran said: “Talks are ongoing with the government. I can’t share details right now. “
UK media reports suggested that the package size could be £ 500 million.
Last week, Stephen Kinnock, an Aberavon MP, whose constituency includes Port Talbot, said in the House of Commons that the government’s Coronavirus large business disruption loan plan was capped at £ 50 million, which was only a tenth of what Tata Steel believes is the cash flow impact on the company over a six-month period.
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He later tweeted: “Steel supports everything from automobiles 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 resolve this temporary cash flow crisis. ”
Steel companies have faced headwinds since the pandemic, as major customers, such as cars, have halted production.
While publishing production numbers last week, Tata Steel said overall demand for European steel had declined compared to normal as many customers, including European automakers, had stopped production. Utilization levels were currently around 70 per cent and shipments continued in both the UK and the Netherlands.
In Q4FY20, Tata Steel Europe was able to keep production and sales stable compared to Q3 FY20.
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Tata Steel Europe sales were 2.37mt compared to 2.35mt in the previous quarter and 2.57mt in the same period of the previous year.
Conversely, Tata Steel India posted a 17 percent drop in sales to 4.03 mt compared to the previous quarter, mainly due to logistics problems and lower demand under closure. Europe, by the way, was not under blockade.
However, Edelweiss Research said it expected Tata Steel Europe to suffer operational losses in fiscal year 21. “We expect a recovery only for Q4FY21,” the company said recently.
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