SAIL, Vizag up long steel prices

Close on the heels of the change in the Union government, Steel Authority of India Ltd (SAIL) and Vizag Steel Plant (VSP) have increased prices of long products by around Rs 4,000 per tonne.

B K Panda, chairman and managing director of VSP, confirmed the development and said prices of all long product categories had been raised on an average by Rs 4,000 per tonne.

Industry sources said, SAIL, too, had increased prices to the same extent yesterday. Tata Steel was yet to decide on the price hikes.

Trade sources said the increase in some of the long product categories was to the extent of Rs 5,000 per tonne.

The hikes in prices came after months of suppression by the earlier government. Prior to the elections, the steel ministry intervened after the user industry baulked at the successive price increases by steel makers. The producers then agreed to hold prices till June, or the end of the elections.

The ministry had also freezed duty entitlement pass book benefits, in a bid to discourage exports.

But, while prices were kept in check, premiums on long products had been rising on account of a surge in the demand.

Premiums are normally charged when a demand-supply gap emerges. Sources said the demand for long products has been much higher than the supply recently. They added that even after the recent price increases, premiums were around 2,000-3,000 per tonne.

Another reason behind the shortage was the production cuts. According to sources, Bhilai, Vizag and Durgapur plants had cut production owing to shortage of raw materials.

Sources said the availability of raw material in the market had become a major problem. Even at higher prices, critical raw materials, such as coke, were not available.

Panda said re-rollers were badly hit and some of them were importing billets in the country to tide over the crisis. "Some billets had come in from China" he said.

Steel industry sources said the current price hike was in tandem with the rise in raw material prices. Coke prices are now hovering around $460 per tonne.

While demand for long products is on the rise, prices of flat products are subdued. Industry sources expect the flat product prices to remain firm due to the slowdown in China.