End-use segments of steel such as automobiles, white-goods and real estate may become costlier in the New Year as large Indian steel makers are considering hiking prices by INR 3,000-4,000 a tonne to pass on the consumer the inflated cost push arising out of costlier coking coal.
While long products which find application in construction might go up twice in January by INR 2,000 a MT; flat products mainly used in the white-goods and automobiles would also be costlier by INR 3,000 per MT.
Though somewhat softened from its high of USD 300/MT in November to trade around USD 270 per MT now, coking coal is still giving sleepless nights to steelmakers who are trying every possible option to reduce cost apart from passing on the consumers to the extent possible. They are required to raise prices further by around INR 6,000 a MT to bridge the gap.
Analysts, however, said that it would be difficult for the makers of long products to raise the price by INR 4,000 per MT in January since the demand from construction sector is yet to pick up. Flat steel producers, however, should not have any fear as demand is certain to pick up.
With the paucity of domestic coking coal, Indian steel firms imports more than 75% of their annual requirement. Any fluctuation in the international coking coal prices thus remains beyond their control and more often than not, they tend to pass on the inflated costs to the consumers. End-users, in turn, jack up the prices of their products.
However, it becomes difficult for steelmakers to pass on the inflated costs always to consumers particularly at a time like now when demand remains anemic. But, this time around, the price hike is inevitable though not to the desirable extent, steelmakers say.
India imported 44 MnT coking coal last fiscal. The raw material attracts 2.5% customs duty. Steelmakers have been urging the government to waive the duty off.
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