Tata Steel's share price has shown resilience, outperforming rivals such as ArcelorMittal, JFE Holdings, Nucor, and Posco, despite experiencing a decline of over 15% from its peak of ₹180.87 in July to ₹153.85 as of August 22, 2024. This drop comes amid falling iron ore and coke coal prices, which have affected the broader steel market. In the second quarter of 2024, China's economy grew by 4.7%, falling short of the 5.1% estimate, while the US economy expanded by less than 2.8% during the same period, indicating a slowdown in global demand for steel [357e62aa].
In its latest quarterly report, Tata Steel reported a revenue drop of 7% to ₹547 billion ($6.7 billion). However, the company's EBITDA rose to ₹68 billion, and profit after tax stood at ₹9.9 billion, showcasing some operational resilience despite the revenue decline. Analysts remain optimistic, with 12 buy ratings and an average target price of ₹168, indicating confidence in the stock's potential recovery [357e62aa].
Despite these positive indicators, Tata Steel's UK operations are reportedly losing over £1 million per day, which raises concerns about the sustainability of its profitability in the face of rising operational costs. Additionally, interest rates may impact construction and steel demand, posing further challenges for the company moving forward [357e62aa].
In the context of the broader market, Tata Steel's performance contrasts with the struggles faced by other major players in the steel industry, highlighting its competitive edge even as it navigates through a correction phase in the stock market [357e62aa].
Meanwhile, in the U.S. steel market, the Biden administration has announced plans to maintain and triple tariffs on Chinese steel to 25%, a move that is expected to impact domestic producers and reopen some steel mills. U.S. Steel's shares have risen by 10.75% following the blocking of Nippon Steel's acquisition, and the company's earnings are projected to increase by 23% over the next 12 months. Cleveland-Cliffs has made an $8.3 billion bid for U.S. Steel, despite its own stock being down 45.4% in 2024, but it anticipates earnings growth exceeding 3,000% [7531bdc8].
Steel Dynamics is also focusing on sustainability, with its stock having a price target of $143.43, representing a potential 30% increase from its current price. This focus on recycling and sustainable practices positions Steel Dynamics as a stable investment opportunity in the evolving steel market [7531bdc8].