India’s largest automaker-Maruti Suzuki India Limited (MSIL), having close to 50% market share, has mutually agreed to give an interim hike of INR 7,350/t ($102)in flats and INR 6,200/t ($86) in longs to steel producers in Q4, SteelMint learned from its credible sources. However, no official confirmation has been received by the company. This interim adjustment would be an additional payment on the contract prices for the current Jan-Mar quarter. Steel maker’s move comes in the wake of widening gap between spot and contract prices, with a major surge post Oct 2020.
Prolonged negotiation between India’s largest auto manufacturers and steel mills comes to an end-
Steel mills had approached auto companies for an increase in contract prices in the wake of a widening gap between spot and contract prices. It is in the nation’s interests that both the sectors survive, grow and support each other.
Half-yearly contracts for auto and steel mills were renewed last in Oct 2020 but thereafter steel prices started to soar high following a robust demand from the automobile sector.
SIAM sales figures for Jan 2021
The next round of talks is scheduled to take place at the end of March for the new six-monthly contract to kick in on April 1, however the steel makers had persistently asked auto firms for a revision in the pricing system considering the volatility in the domestic steel market.
Steel hot rolled coils were priced at around INR 54,000/t (exy-Mumbai) last week, up around 30% from INR 41,600/t in the first week of October 2020, according to the data maintained by SteelMint. Prices are basic and do not include an 18% GST.
In a visionary budget 2021-22, the government has initiated steps that would trigger macro-economic growth that is expected to have a positive rub off on auto sector demand as well. The vehicle scrappage scheme has a good intent and the auto industry would be keen to work with the government on suggestions for maximizing benefits to environment and society besides ensuring their growth story.
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