Cold rolled steel prices may rise 15%

Cold rolled steel prices are expected to increase by around 15 per cent next week. The announcement comes just days after hot rolled steel producers agreed to a temporary price freeze to help the government fight inflation.

Makers of downstream steel, which is used mainly by auto and white goods makers, are expected to raise prices by Rs 4,200-6,500 a tonne, over the ruling price of Rs 32,000-33,000 a tonne. This will apply to quarterly and six-monthly contracts, with retrospective effect from April 1.

The government, which had pressured hot rolled steel makers to hold prices for a month, may not intervene in this case.

The imminent price hike has divided the two categories of steel producers. Hot rolled steel producers say the cold rolled steel price hike move is unwarranted. They point out that prices of hot rolled steel, one of the main raw materials, are unchanged. "The cold rolled price rise will put consumers in trouble," an hot rolled steel industry representative said.

Sources said a Rs 4,400 per tonne increase in downstream steel prices would add Rs 3,000 to car prices.

Cold rolled steel producers, however, claim the increase is essential since some hot rolled steel producers had increased prices by Rs 1,000-1,200 per tonne under some classifications, though listed prices remained unchanged. In addition, prices of other key intermediates like aluminium and zinc have risen sharply in international markets.

Hot rolled steel makers deny the charge of a backdoor price rise. "We proposed to raise prices by Rs 1,200 a tonne last month, but withdrew it partially to help the country fight inflation. Again, this month we announced to hold prices for a month," sources said.