UPDATE 1-Tata Steel India profit falls, sees global output up

* India profit falls 47 pct; sees better volumes and costs

* Sees higher output for global ops in second half

* Domestic volumes to be driven by infrastructure demand (Adds details, quotes)

By Prashant Mehra

MUMBAI, July 29 (Reuters) - India's Tata Steel Ltd (TISC.BO), on Wednesday missed forecasts with a 47 percent fall in quarterly net profit from its Indian operations, and said it expects higher output from its global operations in the second half of the year.

Tata's European unit Corus has raised steel prices by about $40 a tonne, in line with international prices, and expects capacity utilisation in Europe to rise to 65 percent next quarter from 53 percent now, Managing Director B. Muthuraman said.

European capacity utilisation is expected to be 70 percent for the full year, he said.

In India, the company saw volume growth being driven by higher demand from the infrastructure sector.

"Our (India) sales volume has gone up 22 percent in the quarter, largely from the long products due to demand from infrastructure sector. I expect this trend to continue this year," Muthuraman told a news conference.

Global steel production has tumbled this year, as demand in key steel consuming sectors such as construction and automotive shrank, forcing steelmakers worldwide to sharply reduce capacity.

Earlier on Wednesday, ArcelorMittal (ISPA.AS), the world's largest steelmaker, reported second quarter core profit slid 85 percent to $1.22 billion [ID:nLT648279], and No. 2 Nippon Steel (5401.T) booked a second consecutive quarterly loss. [ID:nT184210]

In April, the World Steel Association forecast steel demand would tumble 15 percent in 2009, its steepest fall since World War II. [ID:nLR431360]

Tata Steel said standalone net profit for its Indian operations fell to 7.90 billion rupees ($163 million) for its fiscal first quarter ended June from 14.88 billion a year earlier, largely on lower prices and higher costs because of imported coal, Chief Financial Officer Koushik Chatterjee said.

"In the next quarter we expect volume to be better and lesser imported coal will be used, so costs will go down," he said.

Net sales fell to 55.5 billion rupees from 61.70 billion.

A Reuters poll of 11 analysts had estimated a standalone net profit of 8.15 billion rupees on net sales of 54.92 billion rupees.

The Indian operations account for about a quarter of the group's total annual capacity of 30 million tonnes.

Last month, Tata Steel said weak European demand contributed to a 60 percent drop in its consolidated 2008/09 profit. [ID:nBOM262192].

Shares in Tata Steel ended down 5.8 percent at 441.90 rupees in a Mumbai market .BSESN that fell 1 percent. The shares have more than doubled so far in 2009, after tumbling 77 percent in 2008. ($1= 48.4 rupees) (Writing by Janaki Krishnan; Editing by John Mair)