Rise in rail freight rates sets steel prices in locomotion

Following the railway ministry's decision to increase freight rates by 1.7 per cent across all commodities from Monday, domestic primary steel producers have raised prices of steel products.

"We are compelled to raise prices since we have to pay Rs 400-500 more a tonne," said a Jindal Steel & Power executive.

The Delhi-based company has raised prices of some grades, mostly in the flat segment, by Rs 500-1,500 a tonne.

Sector officials said though the increase was inevitable, there was concern about the amount of the rise, given the bleak demand in the domestic market.

They said the market did not have the required appetite to bear the rises month after month. Slowing growth in the country had reduced demand for the alloy, pressuring prices.

"The sector is bleeding and if the rates are increased like this, companies will have no option but to raise prices," said the executive.

JSW Steel has raised prices of most flat products one-two per cent and of long products by up to a per cent, said Jayant Acharya, director (commercial and marketing).

State-owned Rashtriya Ispat Nigam (RINL), which produces only long products used in construction, has raised prices of wire rods by Rs 900 a tonne.

"There is a strong demand for wire rods across the country. We have raised prices of only this product," said an RINL source.

Essar Steel has increased prices for retail customers by Rs 1,000-1,200 a tonne. It is working out the rise for large clients, said a source. Steel Authority of India was not reachable for an update. Tata Steel has not raised prices so far.