Steel prices to rise on higher input costs

Domestic steel prices may be raised next month given the cost pressures faced by Indian steel manufacturers, coupled with strong demand conditions.

In several neighbouring Asian countries, prices of steel products such as hot rolled coil (HRC) have already gone up by $50 a tonne over the past few weeks to $650-670 a tonne levels, according to analysts.

Senior officials at domestic steel companies declined to comment on the direction of steel prices in the future.

Typically, steel prices are raised in the first week of the month and any revisions are expected only in February. Domestic HRC prices are currently at Rs 27,000 to Rs 28, 000 a tonne, point out industry sources.

"The upturn in steel prices in East Asian countries is attributed to the rising cost of inputs, such as coke and coking coal. The price of coke has moved up from $250 a tonne to $400 a tonne at present over the last six months," analysts said.

Domestic steel companies meet their coke requirements largely from suppliers located in Australia. The rupee's appreciation of 11-12 per cent (year-on-year) has only partially minimised this impact.

In addition, steel companies are also grappling with rising freight and transportation costs as they import components and sell finished steel overseas, given the surge in the Baltic Dry Index on a year-on-year basis.

Meanwhile, steel production in India amounted to 4.56 million tonnes in November 2007, a rise of 7.2 per cent y-o-y, according to data gathered from the International Iron and Steel Institute, the Brussel-based global industry body.