Tata Steel Flags Risks From Rising Crude Prices, Continues Talks With Dutch Authorities

Tata Steel Ltd has cautioned that a prolonged rise in crude oil prices could begin affecting key sectors of the Indian economy, including automobiles and infrastructure, even as the company continues to absorb higher operating costs arising from the West Asia conflict.

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In an interaction with Moneycontrol, Managing Director and Chief Executive Officer T V Narendran and Executive Director and Chief Financial Officer Koushik Chatterjee said the company has so far managed to recover most of the additional costs through stable steel prices in India and Europe. However, they indicated that a sustained increase in energy prices could create broader economic pressure in the coming months.

Input Costs Rise Across Operations

Narendran said freight and insurance expenses have increased globally due to disruptions linked to the conflict in West Asia. Tata Steel, which imports coal and ships iron ore to Europe, has also faced challenges in sourcing key raw materials.

The company earlier sourced nearly 70% of its limestone requirement for India operations from the Middle East and has since shifted to alternate suppliers. It also faced temporary shortages of propane used in downstream operations and switched to substitute gases in some facilities.

In Europe, rising gas prices have added to cost pressures. According to the management, the overall increase in costs across operations is estimated at 10-12%.

The company said steel prices in both India and Europe have remained supportive enough to offset these pressures so far.

Concerns Over Wider Economic Impact

Tata Steel said a further rise in crude oil prices could affect sectors linked closely to fuel consumption and infrastructure spending.

Narendran stated that higher fuel costs may initially impact commercial vehicle demand, while sustained inflationary pressure could eventually influence passenger vehicle sales and construction activity. He also said increased living costs in urban centres could affect labour availability for infrastructure projects if workers migrate back to rural areas.

The company added that risks linked to fertilizer costs, tariffs and weather-related uncertainties such as El Niño conditions could also weigh on rural demand trends.

According to Tata Steel, the full economic impact of these factors may become clearer over the next two to three months.

Netherlands Operations Remain Profitable

Tata Steel’s Netherlands business continued to perform strongly during FY26, supported by higher steel prices in Europe and trade-related measures including the Carbon Border Adjustment Mechanism (CBAM).

Chatterjee said the Netherlands operations have seen a significant turnaround over the last two years and can continue operating profitably even if coke ovens are shut down, as merchant coke remains available globally.

The company is currently in discussions with Dutch regulators regarding environmental standards and future investments at the IJmuiden facility.

Tata Steel has agreed to close its coke and gas plant as part of environmental commitments. However, the company said clarity is required on long-term regulatory standards before major investment decisions are finalised.

Management also noted that some of the standards proposed by Dutch authorities are stricter than global industry norms and may not be technically feasible in certain cases.

The company added that Europe’s trade protection measures, including import quotas and CBAM-related policies, have supported steel prices in the region and strengthened the outlook for domestic steel producers.