Steel producers to hike prices as input costs rise
30 Dec 2013
Steel prices in the country are expected to go up after top steel producers JSW Steel announcing a hike and the Steel Authority of India and Jindal Steel & Power expected to decide on price hikes today.
JSW Steel has already decided to increase prices across all grades by up to two per cent. The company said this has been due to a Rs200-300 per tonne increase in iron ore prices, high cost of coking coal and rising freight rates.
Tata Steel, the country' largest private sector steel producer, did not announce any plan to hike prices, but is likely to raise prices next month with cost of production rising, industry sources said.
Essar Steel is also expected to increase prices by three per cent so as to pass on the high cost of production.
Rashtriya Ispat Nigam, however, is yet to decide on the quantum of price hike as the market is week. Company officials say a price hike of around Rs500 per tonne is likely.
Most companies are hesitant to increase steel prices given the dull demand scenario in the domestic market and are watching market response to announcements of the effected price hikes.
Most analysts are of the view that steel producers will raise prices in January and are unlikely to lower prices in the following months although demand continues to be low because they can no more absorb cost pressures without incurring losses.
It is too early to say if companies will roll back price hikes as increasing prices cause a build-up of inventory.
Demand for steel is picking up in the overseas market, especially in the US, said Acharya of JSW Steel.
Meanwhile, some of the secondary steel mills have shut shop over the past few months, as they could not maintain margins in the dull demand scenario.
This, however, is benefiting integrated steel as these consumers turn to them for meeting their requirement.
For the present, these companies are catering to the deflected demand in the domestic market, say dealers.
