Steel Counters Shimmer On Price Hike Talk

Steel stocks gained following reports that domestic prices are set for another hike from July 1. Tata Steel was up 2 per cent at Rs 135.20, Jindal Strips was up 6 per cent at Rs 125.80, Steel Authority of India was up 1.34 per cent at Rs 11.30, Jindal Iron and Steel was up 15.54 per cent at Rs 45.35.

Steel scrips are firming up on reports that the companies may increase prices from July 1 by Rs 1,000-1,500 a tonne for hot-rolled (HR) coils. This will take HRC prices close to their two-year highs. The steel industry has been consolidating as a result of the spurt in domestic and international steel prices.

Depending on the product, domestic prices have increased by Rs 700 to Rs 3,600 a tonne between February 2002 and May 2002. Another price increase was effected in June (by Rs 500 to 800 per tonne), which was also absorbed by the market.

As a result, the fundamental strength of the domestic industry has improved. Prices in the local market are tracking the global market, particularly in the US. The upward trend is significant in the backdrop of a 6-10 per cent fall in realisations in FY 2001-02 over the previous year.

The spurt in global steel prices is attributed to US anti-dumping actions, which had made exports to that country, by a host of countries, excluding developing countries like India, highly unremunerative.

As a retaliatory action, the European Union also slapped similar duties on steel imports, wherein developing countries such as India were exempted again.