Friday, March 18,
Steel companies’ margins may decline in the first half of this year due to their limitation in passing on the cost increase on the back of higher contract prices for key raw materials..*
While the non-integrated steel producers are likely to be hit by increase in both iron ore and coking coal prices, the integrated steel producers such as SAIL and Tata Steel are partially insulated on the iron ore front.
After pushing up steel prices in January and February, steel companies had to settle for a moderate price hike in March due to lower demand from the end user industry, said Ms Revati Kasture, Head, Industry Research, Care Research.
The cumulative standalone profit margin (net profit/net sales) of top steel companies Tata Steel, SAIL, JSW Steel, Ispat Industries and Bhushan Steel has shrunk to 12.2 per cent in last three quarters of this fiscal from 13.2 per cent in the same period last year.
The percentage increase in the cost of production was about 34%, while finished steel prices have gone up by 24%. However, in absolute terms, the rise in prices of finished steel products in comparison with the increase in raw material prices was almost similar, though with a time lag.
Source: The Business Line
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