 "Rising construction demand prompts steel firms to hike prices for March")
For the third successive month, domestic primary steel makers will be raising product prices for March, mainly on the back of pick up in demand from the construction segment.
JSW Steel intends to raise long product prices by Rs 500-750 per tonne and prices of flat products by Rs 500 per tonne, while Essar Steel will be raising prices of all its products by Rs 1,000 per tonne.
Though state-owned Rashtriya Ispat Nigam does plan to raise its product prices, the company is yet to decide on the quantum of price hike.
"Market dynamics do hint at a price hike for March but the quantum is being worked out," a company source close to the development told Business Standard. "Inventory is going down in long products and so its quite clear that demand from the construction side has gone up," he said.
Apart from increasing demand, rise in cost of production is also another strong trigger for the decision of an upward price revision for March, said steel companies.
"There is a cost push no doubt and this is one of the reasons as well for the price hike," said the source from Essar Steel.
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Meanwhile, Tata Steel, the oldest steel producer in the country, which has its price revisions on quarterly basis, said it sees no indication for a price revision before end of March. "If at all there is a hike in prices it will be for April," a source close to the development said.
State-owned Steel Authority of India was not available for comment.
"Though we are going for product price hikes for the third month in a row, the price levels are that of 2012. In case of flat products, we are at the same level as in April 2012 and in case of long products, in fact we are down by Rs 3,500 per tonne compared with April 2012 price points," said Jayant Acharya, director-commercial and marketing of JSW Steel.
Prices are still lagging behind while the input costs have increased tremendously. On the cost side, price of iron ore sold through e-auction has increased. Coal prices have decreased to some extent but its benefit could not reach us due to exchange rate fluctuations, Acharya said.
Among leading steel makers JSW steel has least access to captive iron and coal mines.
Analysts were of the view that the demand has been up only sequentially and that it continued to remain down when compared with same period last year.
"If the March quarter is being compared with December quarter then yes demand has gone up but compared with last year's March quarter demand continues to remain weak,"said Giriraj Daga, senior analyst with Nirmal Bang.
The March quarter is considered as the peak season for construction activities and so demand for steel usually rises in this quarter.