Iron ore and coking coal price increases have started kicking in for the steel industry, putting prices under pressure. Steel companies are contemplating a marginal increase for the month. A decision would be taken in the next couple of days, said Jayant Acharya, director (sales and marketing), JSW Steel.
Iron ore prices surged to $142 (Rs 6,560) a tonne for exports to China, an increase of about seven per cent, in the past fortnight. Prices in China—which imports 62 per cent of its iron ore—have climbed to an 18-month high. Steel industry sources said export prices to China had become a benchmark for domestic prices as well.
Moreover, coking coal contracts had been re-structured due to the slowdown and some of the high-priced coal of 2008 would have to be picked up now. Coking coal contracts being negotiated could be as high as 70-80 per cent over prices last year.
Acharya said the excise duty rise had already been passed on to the consumer, translating into an increase of Rs 600-800 a tonne in prices. As for the raw material cost rise, “we will have to take a call whether we want to increase prices this month or keep it for next month,” he said.
Among the cold rollers, Bhushan Steel managing director Neeraj Singal said prices could be increased this month by Rs 1,000 a tonne. In the coming months, steel prices could see some significant increases. The iron ore miners want the contract prices to be closely linked to the spot prices.
Globally, spot prices of iron ore for the coming month were higher by 6.8 per cent and coke by 9.8 per cent. Raw material price changes had pushed some US steelmakers to raise prices by $50 a tonne.
