But it's now time for the earnings conversation. It was a good quarter for Tata Steel. The company's net debt reduced while Europe's business EBITDA losses also narrowed sequentially. Our colleague Nigel spoke to the CEO and MD, T.V. Narendran, and started off by asking about their outlook on steel prices for Q1 FY23. Let's listen to the slice of that conversation.
Yeah, steel prices have been moving up for multiple reasons. Firstly, the demand has been strong in India. Secondly, there are cost pressures on the industry, particularly in the last 2 to 3 months. And thirdly, prices have come back from the lows that we'd seen in October-December quarter and continuing to January-February. So, we are coming back to 57, which is pretty much what it was about a year back. Our guidance for this quarter is 6,000 rupees per ton higher for this quarter compared to the previous quarter.
Whether steel prices will go to 60,000 for the rest of the year, I certainly think it will stay on the higher side for two reasons. One is, like I said, the cost pressures. The other is, of course, like I said, the demand is strong, but also a third reason, which is that Chinese steel prices have started moving up again. It's crossed $500. Maybe because of cost pressures and also because of the export restrictions that they put in place. So, overall, I'm a bit more positive about the industry for this year compared to last year.
Well, that's good to hear, sir. And do you think directionally then the EBITDA per ton moves up from around this 15,000 rupees per ton or closer to around 18,000-19,000 rupees per ton get a build right now?
I won't give you a specific number, but it will certainly look better this quarter compared to the previous quarter. Not all of the price increases will flow through to the EBITDA because we also have cost increases. Apart from the usual coal prices, etc., the rupee getting weaker, freight rates going up, many consumables going up because of the Middle Eastern crisis. So, I think some of the price increases will be eaten up by cost, but overall we expect a bit down Q1 for India to be better than Q4.
Let's talk about Netherlands then. You know, the coke oven shutdown notices that you have got. You'll have to now source some part of your coke requirement externally. What is the current gross margin in Netherlands and because of this external sourcing, what does that come down to?
So, you know, we've got this notice. We have not got any timelines and we are working with the authorities. We are trying to find the way to do it in a proper controlled manner. We had already a plan that we would bring it down or close it by 2028 2029. And that's the timeline that we would prefer for a controlled and a planned transition. But that's a conversation going on with the authority. So, it's not that we will need to be buying coke immediately, but over the next few years we'll have to transition to buying coke instead of making coke there. So, we will plan on that over the next few years. I think the current impact is also on the direct strip plant which had been closed for the last few weeks, but that should open in the next few weeks, next couple of weeks or so. That was more because of some other emissions that we had coming out of that plant.
Okay, and Europe has turned into the black. Now you have a bit of a split verdict that's coming out. One is that Netherlands profitability could come down a little bit directionally and UK's losses could come down a little bit. Do you expect Europe as an absolute number to continue remain in the black? And if you could help us out with some guidance on the EBITDA per ton on both these two.
Yeah, so if you look at it at an overall level, Netherlands which was traditionally positive EBITDA was about minus 500 million EBITDA about 3 years back because of the issues we had with the blast furnace. We moved it to last year we came to about plus 80. This year we finished at plus 260 or 270. So, we moved about 800 million from negative to positive in Netherlands. This year it will be positive EBITDA. It will be we expect it to be better than what we delivered last year for the full year. Quarter on quarter there will be some changes because of some of the disruptions, but Netherlands is not going to do worse than the previous year. It will do as well as the previous year is our expectation if not better. As far as UK is concerned, again the trend has been in the right direction. May not be as fast as we would have liked it to. So, if you see the improvement in EBITDA for the financial year which is finished, it's about 150 million better than the year before that. Still negative, but better. And this year we expect it to suddenly start moving into positive territory. Q1 will certainly be better than Q4, and Q2 will be better than Q1 because we've got the policy support that we've been talking about for the whole of last year. We got that support in the middle of March.
Okay. So, but UK turns into the black towards the end of this year?
Yes, certainly it does. On a quarter basis, yes. On a for the full year basis, depends on how we do in Q3, Q4. The only uncertainty is what's happening in the Middle East. You know, otherwise we would have clearly become positive for the full year this year. But I think we're heading in that direction and we are hopeful to be there.
