Commodities

Steel companies raise prices

BS Reporter / Kolkata Sep 02, 2010, 00:28

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Cost pressures trigger a Rs 1,000-1,500 a tonne increase, after four months.

Steel majors have increased prices of flat steel by Rs 1,000-1,500 a tonne after a gap of four months.

Ispat Industries, Bhushan Steel and Essar Steel have all announced such an increase. Flat steel is used in automobile and white goods industries.

Steel Authority of India Ltd (SAIL) would increase prices of flat and long steel products by about Rs 1,000 a tonne. Long steel is primarily used by the construction sector.

“The increase is largely led by cost push. Coking coal and iron ore prices have increased by the same amount. Also, China has withdrawn export incentives, which is good for the industry,” said Bhushan Steel managing director Neeraj Singhal. The company has increased prices by Rs 1,000 a tonne.

The last increase for most companies was in April. “Despite the current increase, prices are lower than April levels,” Singhal said.

Prices of hot-rolled coil, the benchmark for flat steel, are at Rs 30,500 a tonne compared to Rs 32,783 in April. Iron ore prices are at $141 a tonne, compared to a three-month average of $138 a tonne.

“We expect prices to come back to April levels by November-December,” said Singhal. Some companies, like Uttam Galva Steels that had not announced increases are likely to take a call in the next couple of days.

Going forward, companies expect prices to remain firm. “Market inventories have dropped as the buying was need-based,” a producer said.

Steel producers also think global prices would pick up in a staggered phase in the Europe and the US.

“Prices in Europe are likely to pick up from September while prices in the US would increase from November,” an industry representative said.

Corus Speciality Steels has increased transaction prices for its aerospace products by 4-10 per cent for orders for January deliveries.

According to Advendus Research, steel prices would revive in the third quarter of FY11. Moreover, forecast was that raw material prices would decline, resulting in improved profitability for the companies.

“We forecast iron ore and coking coal prices to decline 10 per cent and five per cent, respectively in the second half of FY11,” the research report said.