Steel prices to go up by Rs 1k per tonne
Price hikes in Europe and low inventory levels in developed markets have led Indian steelmakers to increase hot rolled steel prices, the base grade steel category, by an average of Rs 1,000 per tonne.
By TNN |
MUMBAI: Price hikes in Europe and low inventory levels in developed markets have led Indian steelmakers to increase hot rolled steel prices, the base grade steel category, by an average of Rs 1,000 per tonne.
The hike, effective from March 1, comes even after an exemption in duty on coking coal by the Union Budget on Wednesday, which was expected to ease the cost pressure for domestic steel companies.
Coal is a major raw material for steel companies and accounts for almost 35% of the total cost of production. The hike takes the average steel price to Rs 27,000 per tonne.
Interestingly, none of the integrated companies officially announced the decision to hike product prices. Senior officials in the local steel industry confirmed the development and added that the hike was in the range of Rs 1,000 to Rs 1,200 per tonne.
“Only (state-owned) Steel Authority of India might be forced to hold back the price increase,” they said, adding that the government is “under immense pressure to rein in inflation.” The hike, the first in 2007, comes after two continuous downward revisions in prices.
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In two months, steel companies had reduced prices by Rs 1,000 and Rs 500 per tonne in two instances. According to analysts, the latest hike narrows the gap between local and international prices to about Rs 500 per tonne. News of an impending price hike in steel led to increased buying in metal stocks with the metal index of the Bombay Stock Exchange rising up 0.2% on Thursday. Shares of two of the biggest private players, Tata Steel and JSW Steel rose by about 2%.
Internationally, the past two weeks have seen price hike announcements by major steel global companies including the largest, Arcelor Mittal and Corus, the Anglo-Dutch steelmaker recently acquired by Tata Steel.
An international report, quoting a research institute affiliated with South Korean steelmaker Posco, said that “the US, European and Chinese steelmakers will try to increase prices in the second quarter as global rates that continued to fall since the mid of last year, are showing signs of stabilisation.” This is the first rebound in prices since August 2006, said another report.
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Europe’s Corus and Arcelor Mittal have increased prices by 7%, while Chinese steel players such as Baosteel, Anshan Iron & Steel and Wuhan Iron & Steel are expected to increase prices in the next fortnight. “Interestingly, a 13.5% increase in global crude steel output in January didn’t lead to softening of prices, indicating that the demand is firming up in markets all round the world,” said a steel industry analyst.
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