Specialised steel makers up rates by 3.5%

Revival of realty sector demand triggers move.

Anticipating a revival in demand from the construction sector, India's private sector specialised steel producers have raised prices by 3.5 per cent across all product categories.This is the first time since the appearance of the economic slowdown that the steel producers have raised prices.

Uttam Galva, the country's leading manufacturer and exporter of galvanised steel, has raised prices of zinc galvanised steel products by Rs 750 per tonne. The company is also planning to raise prices of other products, including colour-coated steel and cold-rolled products, by Rs 1,000 per tonne.

"As domestic producers have not achieved the 100 per cent capacity utilisation so far, the intermittent demand has offered room to raise prices. However, we have not taken any firm decision on raising prices of colour-coated and cold-rolled products," said Ankit Miglani, director of Uttam Galva Steel.

Anil Sureka, chief financial officer of Ispat Industries, confirmed that the galvanised steel producers have raised prices by 2-3 per cent. However, he denied any price rise by primary steel producers by saying, "A lot of cheap materials are being imported from Ukraine, Russia etc."

According to the information available on the Ispat Industries' Website, the company has raised prices of all product categories by Rs 1,000, effective April 1. But, Vinod Garg, director (marketing) of the company, denied any such move.

An upward price revision is directly proportional to the recovery in the country's economy, which is showing some signs of revival.

Since the collapse of Lehman Brothers in August 2008, global steel makers, including Indian companies, had reduced production by up to 25-30 per cent in response to poor demand from the infrastructure sector. But, an upward price revision by primary producers hints at acceleration in demand, mainly of long steel products from the construction sector.

An Essar Steel spokesperson said that the price of HR coil has not increased.

JSW Steel, which reported an 11 per cent increase in Q4 steel production to 11.06 tonnes, also denied any such move so far. JSW Group CFO Seshagiri Rao said, "Despite a growth in domestic demand, JSW Steel has not firmed up any plans to increase prices." He also rejected any possibility of a fall in steel prices from the current level either.

During 2008-09, the company said its crude steel production stood at 3.86 million tonnes, up 7 per cent, from 3.59 million tonnes in 2007-08. In March this year, its output rose by 28 per cent to 456,000 tonnes as against 328,000 tonnes in the corresponding month last year.

JSW is witnessing a clear recovery with the rise in saleable steel and production volumes. Compared to the December quarter, the company reported a growth of 28 per cent in the March quarter. Industrial construction and rural infrastructure demands have supported the growth of the steel sector though the auto sector remained an underperformer. This has triggered the demand for long products in the country.

"In February, we witnessed the revival of the auto sector. In the coming weeks, the auto sector will also pick up. Stimulus packages announced by the government, coupled with easing of bank credit, have led to a spurt in steel demand during the fourth quarter," Rao said.

A Tata Steel official said, "Demand is picking up after remaining depressed for months. We have cleared our inventory accumulated during the sluggish phase. However, the company is not looking at raising prices anytime soon. We hope it will remain stable for sometime."

Tata Steel's production in 2008-09, jumped 11 per cent to 5.3 mt against 4.8 mt in the previous year. The company also registered a 14 per cent hike in hot metal output to 6.2 mt in 2008-09 compared with 5.5 mt in 2007-08.