No price increase this month, may hike in April: JSW Steel

JSW Steel is likely to increase prices of its products next month as rising prices in the international markets are hitting its margins, a top company official said today.

The company, however, has not raised the prices for the current month, JSW Steel's Joint Managing Director and CFO Seshagiri Rao told PTI.

The recently proposed hike in rail freight from April will also increase the freight cost for the company by Rs 60 per tonne and will be a factor in deciding the prices for the next month, he added.

"In this month, we have not raised (the prices), only we are looking at (raising the prices) next month," Rao said.

He further said "there is a big difference, about Rs 5,000 per tonne difference, between the landed costs of imports and local prices. So, there is a big scope to increase the prices but we would take a call only next month (on raising the prices."

JSW's product prices are currently hovering in the range of Rs 32,000 per tonne to Rs 40,000 per tonne.

Steel Authority of India (SAIL) and Jindal Steel and Power (JSPL) are among the leading producers who have increased the prices for the current month.

Citing increase in international prices and rising coking coal rates, JSPL raised the prices by up to Rs 1,000 per tonne, while SAIL hiked its product rates by up to Rs 500 per tonne.

According to Rao, JSW will be able to achieve its production guidance of 8.5 million tonnes for the current fiscal despite running its plant below optimum capacity due to iron ore shortage.

The Sajjan Jindal-led steelmaker uses railway network for transporting 60% of its total sales and Rs 60 per tonne increase in railway freight rates would translate into increasing company's transportation costs by another Rs 33 crore.

At present, JSW is currently running its 10 million tonne plant at Karnataka's Vijayanagar at 75-77% capacity as quality of iron ore, which is sold through auctions in the state, has gone down in recent months in the state.

Iron ore is the vital steel making raw material. Steel producers in Karnataka are struggling to run their units at peak levels due to shortages of iron ore as a mining ban is imposed in the state and very few mines have got the permission to reopen them.     

Shares of JSW Steel were being traded at Rs 744.10 apiece on the BSE at 1505 hours, up 1.74%.