India's Tata Steel posts first quarterly loss in 2 years

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Global steel output rose 6.8 percent in 2011, down from a 15 percent growth in 2010, according to the World Steel Association.

Earlier this month, ArcelorMittal , the world's largest steelmaker, posted an unexpected quarterly net loss [ID:nL5E8D70XS], while Korea's POSCO <005490.KS>, the world No 3, reported a smaller-than-expected profit rise.

Tata Steel reported a net loss of 6.87 billion rupees (90 million pounds) for its fiscal third quarter ended December, compared with a net profit of 9.49 billion a year earlier. Net sales rose 15 percent to 329.64 billion rupees.

After minority interest and share of associates, it reported a net loss of 6.03 billion rupees.

Analysts, on average, had expected a net profit of 3.4 billion rupees, according to a Reuters poll of 12 brokerages.

"There hasn't been a demand uptick that was expected, so prices have come down. At the same time, none of their production costs are lower, so margins are under pressure," said Ravindra Deshpande, sector analyst at Mumbai's Elara Securities.

"It doesn't look promising for the next couple of quarters," he said.

MARGINS SLUMP

Tata Steel said consolidated margins for the quarter slumped to 5.9 percent from 11.6 percent a year earlier.