Steel companies are planning to raise product prices by
around Rs 1,000/MT, driven by the sharp rise in input costs and recent
production cuts. The price hike, likely to be made early next week, would be
the first in four months which would make most consumer goods costly as steel
is a widely used alloy.
However, a formal announcement by the four primary steelmakers – state-owned
SAIL, JSW Steel, Tata Steel and Essar Steel would not be made
before September 5, said industry executives.
Currently, the average price of hot rolled coils, the base grade category of
steel, is around Rs 35,000 a tonne.
Earlier, the companies raised prices in May when hot rolled coil steel was made
costlier by Rs 1,000/MT. Since then, steelmakers were forced to hold on to
prices, despite a 70% rise in coking coal prices, as demand for steel had
declined and most users of steel were not ready for a price hike.
The steep rise in coking coal prices forced many steel mills to cut production
as it was unviable for them to produce. JSW Steel cut its production
by about 20% after the Supreme Court suspended mining in Karnataka.
Iron ore, the main raw material for making steel, has reached a three-month
high of $180/MT due to supply restrictions and revival in demand from the
largest market for steel – China. Iron ore prices shot up after production from
India fell due to the court clampdown on illegal mining in Karnataka.
“We haven't decided on a price rise yet. But it's definitely on the cards
as we can't absorb the rise in coal and iron ore prices,” said a senior
official from a large private company which buys the two commodities from the
open market.
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