Steel makers to again raise prices

Mull raising prices by Rs 1,500-2,000 a tonne for May to cover spike in input costs

Indian steel producers are considering raising prices by Rs 1,500-2,000 a tonne for May, to cover a part of the sudden spike in the cost of inputs.

After the imposition in February of a minimum import price (MIP) to protect them from cheaper import, producers had raised prices by four per cent. The trade says raw materials have since continued to move up. Since mills had cut prices over the past two years to match cheaper import, they are not in a position to absorb the rising input prices.  "The industry is already under financial stress,” said H Shivramkrishnan, chief commercial officer, Essar Steel.

The basic raw material, iron ore, is costlier by 53 per cent over the past four months. The benchmark 62 per cent iron content for delivery in North China is quoted at $65.35 a tonne, as against $42.70 a tonne on January 1.

The price of hard coking coal has risen by 25 per cent to $95.25 a tonne and of met coke with 62 per cent iron content by 20 per cent to $145.5 a tonne.

Most of these input prices have surged after the government imposed an MIP on 173 steel products on February 5, to curb shipments from China, Russia, Japan and South Korea.

“We will have to keep observing the movement in raw materials and the international prices of steel and then take a call. In general, prices have gone up.  In China, prices have risen even more than $100 a tonne. The volatility in both raw materials and steel prices in the past few days has been very sharp. We will take a view in the next few days,” said Jayant Acharya, director (commercial and marketing), JSW Steel. Demand from the construction and infrastructure sectors has been on the rise since the ‘above normal’ monsoon forecast this year.

“It is difficult to ascertain actually where we are heading. We will be watchful for a little more time and then take a call. The raw material price rise should reflect in terms of price increase to the extent markets absorb,” said Acharya.

Responding to the government’s MIP, benchmark hot rolled coil (HRC) prices in Indian markets rose 12 per cent to Rs 35,000 a tonne.

Similar growth was seen in cold rolled coil, to Rs 47,500 a tonne. Since January, all varieties of steel products have become costlier by 12-20 per cent.

“By contrast, the HRC price in China has jumped by 35 per cent to $460 a tonne, from $300 a tonne early this year. All categories of steel, in fact, have become costlier by 35-45 per cent this year, which shows further room for growth of Indian steel prices,” said Sahil Verma, an analyst with OreTeam Exim, a Noida-based consultancy.

Even with current levels, manufacturers say they're seeing a strain on pricing and margins, especially small scale players, and this warrants a further increase in prices by eight to 15 per cent.India’s steel demand is estimated to rise six per cent this year from a little over 80 million tonnes in 2015-16.