Essar Steel raises prices, JSW to follow

The relentless fall in rupee, which has been taking input costs of primary steel producers only higher, has prompted Essar Steel and JSW Steel to consider increases product prices for August.

While Essar Steel has raised prices of all its products by Rs 1,000-1,200 per tonne from August 1, JSW Steel is planning to follow suit and is in talks with its clients. The company plans to hike prices of all its flat products and some of its long products.

"We are in discussion with our clients for the price increase as there is a cost push due to rupee (depreciation) and also internationally flat steel product prices have gone up," Jayant Acharya, director-commercial and marketing of JSW Steel said.

Both JSW Steel and Essar Steel are into production of long as well as flat steel products. Flat steel products find wide application in the auto industry, while long products are used in the construction segment.

Coking coal and iron ore are the two key raw materials used for making of steel. Since domestic primary steel producers are dependent on imports of coking coal to meet their fuel supply requirement, weakening of rupee against the dollar swells the import bill of these producers, in turn raising their cost of production.

On Friday, the rupee fell 67 paise to an all-time closing low of 61.10  against the dollar. Also, in the week ended Friday, the local currency depreciated 3.4%.