Steel firms up 2% in 2 wks on rising input cost

In the domestic spot market, steel prices have firmed by 2 per cent across the board in the last fortnight. This is on the back of a combination of ever-increasing raw material prices and rising infrastructure sector demand.

In Mumbai, the prices have gone up by Rs 500 in the last two weeks on occasional demand from the construction sector.

With the upward price revision, in the north Indian markets, steel ingot is quoting at Rs 23,200 and HRC (hot rolled coil) at Rs 34,600 a tonne. CRC (cold rolled coil) has shot up to Rs 35,400 a tonne.

Although steel prices had been stagnant-to-upward for the last several months, they had not picked up in tandem with the raw material prices, which had more than doubled over the past one year, an analyst said.

"Policy blues that the steel sector is facing today is the opening of free iron ore exports. Till recently, exports were restricted to licensed miners and exporters, but now the sector has been opened to anybody resulting in lower availability for domestic users," said Anil Suraj, managing editor of Steel Town Weekly, who also owns a steel mill at Gobindgarh.

In fact, domestic steel producers were pressing for a blanket ban on iron ore exports, and even the government showed its keenness. But later, the existing restriction was also completely lifted, thereby pushing north India-based induction furnaces into a hole, Suraj added.

For secondary steel processors, availability of melting scraps is a major problem. And the country generally depends on imports from across the world. But at present, importers are unwilling to burn their fingers by importing this valued raw material at higher-than-expected prices as they would not get any return on their investments.

Melting scrap is currently quoting at Rs 18,600 a tonne, hardly Rs 1,000 lower than the steel ingot price in Mumbai at Rs 19,000 plus 16 per cent excise duty.

At present, traders expecting a favourable Budget with certain tax cuts are hesitant to build stocks. But the housing sector demand is warming up steel almost regularly.

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Tata Steel ups Tiscon prices

Tata Steel has raised prices of its Tiscon brand of long products by Rs 500 per tonne. The new prices came into effect January 1. "We have raised prices of our Tiscon brand, but have kept other product prices unchanged," an official said.

Tiscon is one of the leading brands in the fragmented market for long products, which mostly find use in real estate and construction.

Tata Steel had raised its long product prices last month too, but had kept prices of other products unchanged, beating a market trend that saw many leading players cutting hot-rolled product prices.