Steel firms set to raise prices by Rs 1,500/tonne

Steel companies are all set to raise prices of hot-rolled coils by Rs 1,500 per tonne from February, citing increased input costs, reduced availability of raw material and rising global prices as the reason.

After this round of increase, HR coil prices will touch Rs 22,750 per tonne, an all time high in the last five years. The price hike will work out to around seven per cent.

This hike comes a month after leading HR steel producers including Steel Authority of India Ltd, Tata Steel, Essar Steel, Ispat Industries and Jindal Vijaynagar Steel raised prices sharply by Rs 1,400-1,500 per tonne in the first week of January.

"Input costs have risen 14-17 per cent between November and December last year. A seven per cent hike in HR coil prices absorbs only half of the rise in input costs," a steel industry source said adding: "Coke prices have risen 23 per cent, scrap prices by 14 per cent and sponge iron prices by 17 per cent." Steelmakers also point to the reduced availability of raw material at a time when demand is increasing rapidly.

"Coke and iron ore mining capacities have not kept pace with the sudden rise in demand. Since the steel industry was under a recession for the last three years, no major investments have taken place in this sector except in China," the sources said adding: " The US has imposed a duty of over 30 per cent on export of scrap from the country."

The sources also said that the rise in HR coil prices is lesser than in global markets. "Prices in the US and Europe have gone up by 12-14 per cent. Steel prices internationally have gone up to $450 per tonne," the sources added.

The proposed price hike comes on the face of increased resistance from downstream user groups.

The government had earlier in the month reduced the peak customs duty from 25 per cent to 20 per cent and also removed the four per cent special additional duty, following several demands made by downstream users like the Cold Rolled Steel Manufacturers' Association.