Jindal Steel & Power Limited, one of the leading manufacturers of Plates, is expected to raise its prices by 4-5% for Plates of all sizes. The price hike comes at a moment, when there is short supply in the market. As per our sources a hike of INR 1500-2000/MT is expected to be effective in next few days.
Justifying JSPL’s Price Rise
Domestic demand for Plates has remained stable; however, market is facing a short supply of Plates. As per latest data available, production of Plates by Essar and SAIL has not seen any significant improvement in the last few months. Infact the production for Essar has dropped between Jul’13 & Oct’13. This has created an artificial scarcity in the market. A comparison of Plate production by Essar, SAIL and JSPL from Jul’13 to Oct’13 is as shown below.
Import Feasibility
Amidst this shortage of supply in domestic market, no major imports for Plates are seen from Japan and Korea. Plate imports from Japan and Korea are costlier by USD 15-20/MT and thus imports are least feasible at present. This has given JSPL a room to increase its prices. Market participants expect this price hike to be assimilated in the market.
SteelMint sources learned that deep discounts are offered by manufacturers for bulk deals. It is believed that some deals were sealed for as low as INR 35,000/MT (Average basic price) for Plates ranging from 5-40 mm, whereas actual retail prices are at INR 38,000/MT (Average basic price ).
This price hike may not be a surprise to the market as it was expected by a number of market participants. It is to be understood that demand may not have improved significantly for Plates; however short supply of Plates will help JSPL to justify its price hike.
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