Galvanised steel prices hiked

Uttam Galva, JSW and Ispat expect surge in demand from construction industry.

Anticipating huge demand from the construction industry, galvanised steel producers have raised their basic selling prices with effect from February 22, retrospectively.

Leading the pack, Uttam Galva Steel has raised the selling prices of its products by Rs 2,500 a tonne across all varieties. With this hike, the standard GC40 grade galvanised steel is quoting at Rs 36,500 a tonne, ex-Mumbai (freight rate extra for ex-Delhi).

Unconfirmed sources said JSW Steel has also raised the prices of its products between Rs 250 and Rs 1,750 a tonne depending upon quality of output.

Ispat Industries, another galvanised steel producer, too has decided to increase its prices in the range of Rs 1,500-1,800 a tonne across all categories effective from March 1.

Galvanised steel producers largely attribute the current price hike to squeezing of their margins owing to a spurt in production costs.

"Costs of raw materials have gone up substantially. Sharp rises in fuel and zinc prices, coupled with rising freight rates due to the recent Supreme Court directive on loading not more than 9 tonne on a truck, were squeezing our margins. So, we have decided to hike prices, justifiably," said Ankit Miglani, director, Uttam Galva Steel.

Construction activities in the country are slowly picking up, and the demand for galvanised steel and carbon steel is increasing slowly but steadily.

However, carbon steel prices have remained stagnant for quite some time in the domestic market, and this trend is expected to continue at least till the Budget, experts said.

Given the scenario, this price rise in galvanised steel is justifiable, but it is not timely, an analyst said. The domestic galvanised steel producers are trying to move in tandem with the steel companies in neighbouring countries like China.

Steel mills in China are all set to hike their selling prices by 10 per cent after experiencing a nine-month deflationary spiral. In fact, the Chinese steel industry was open to raising prices to the tune of 20 per cent which, it said, was quite justifiable.

But, as inventory started piling up on the back of recent expansion in steel capacity, it restricted the raise to 10 per cent only, another analyst said.

India produces about 4 million tonne and consumes about 1.5 million tonne of galvanised steel. In the recent past, steel mills around the world added new capacities in a big way to meet the anticipated rise in demand in the near future.

But, demand has not peaked up as per their expectations, which has resulted in stockpiles and declining prices, the analyst added.