Domestic steel majors are
expected to hike prices further in October on the back of a likely upswing in
industrial and infrastructure construction activities, according to a CMIE
report.
“We expect steel companies to
hike prices in October-November once industrial and infrastructure construction
activity gathers pace,” the Centre for Monitoring Indian Economy (CMIE) said in
its monthly review.
In FY’12, the agency expects
finished steel prices to average 7 per cent higher than in 2010-11. It also
noted that steel prices have already risen nearly 15 per cent in the first
quarter of the fiscal.
However, the CMIE has sharply
scaled down its growth forecast for finished steel production for the fiscal
from 12 per cent to 9.5 per cent.
“The downward revision is due to
the lower-than-expected growth in demand for steel in the first quarter and a
shortfall of iron ore likely to be faced by the steel units in Karnataka,” it
said.
Iron ore prices are ruling high
due to the ban imposed by the Supreme Court on mining in Bellary and a huge
demand for the commodity from China, the report said.
Most companies have signed coking
coal contracts for the September quarter at $315 a tonne, which is 40 per cent
higher than the year-ago level.
It may be recalled that on July
29, the Supreme Court had suspended iron ore mining in Karnataka's Bellary
district.
“If the ban continues for long,
the plants located in Karnataka will have to cut down production,” the CMIE
said.
Source: The Business Line
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