Steel companies are
set to raise prices in the range of Rs 1,500-2,000/MT due to rise in coking
coal and iron ore prices. The increase of prices will be mostly in
flat products. The price revision, this time would be significantly higher
compared to price hike last time by Rs 500 a ton in August.
Steel giants like Essar are
understood to have announced an increase, while other manufacturers are still
negotiating with customers and are likely to follow the suit shortly.
“The hike is led by
cost push. We have held prices for so long, but now it has to be passed on to
the customers. We will finalize the prices by the end of this week, but it will
be effective from December 1,” said Mr. Nittin Johari finance director for Bhushan Steel.
Following the
increase in steel prices globally domestic prices would be at the same level as
landed cost of imports. After the increase, the benchmark price of hot rolled
coil (HRC) would be Rs 34,000/MT (Basic Price).
In the past couple
of months, prices of coking coal and iron ore have increased by about $10-$20 a
ton. Currently the prices are $130/MT for Iron Ore and that of Coking coal is
at 161.50/MT,” a steel producer said.
On the other hand Government's
initiative to curb illegal mining has led to a serious shortage of iron ore in
the market, with industry estimates suggesting that the production of iron ore
could be at about 100 million tones, which is just half of last year's
production. The difference in demand-supply has led to an increase in prices
that is more than the international level. There is about $30 difference in
cost per ton between international and domestic prices.
According to Joint
Plant Committee figures, during April to October, imports stood at 4.2 million tones
with an increase of 30 per cent over the same period last year.
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