HR steel makers suspend rebates

Long-term contract prices of hot-rolled steel have gone up by about Rs 1,000 a tonne for April on account of suspension of rebates by leading suppliers, an industry aide said today.

Steel makers, who had announced a freeze on prices of HR products as a gesture to help the government fight inflation, have cut the rebate to companies.

"Despite the freeze on prices, the effective price for us has gone up by about Rs 1,000," the aide, who represents a company that makes cold-rolled steel, said.

India's headline inflation measured by the Wholesale Price Index was 6.39 per cent for the week ended March 24, easing marginally from the previous week's 6.46 per cent.

However, the inflation rate is still way above the government's comfort level of around 5 per cent.

"The cut in discounts is a good step to offset a portion of the hike in input costs, which have gone up by up to Rs 2,000 per tonne since January," an analyst with a domestic brokerage said.

Prices of iron ore, a key raw material, have gone up by 9.5% starting April. Hot-rolled steel players declined to comment on the matter.

Hot-rolled steel is a key raw material for making cold-rolled steel, prominent users of which are the automotive and white goods industries. Shares of HR steel companies reacted positively to the news, with JSW Steel Ltd., Essar Steel and Ispat Industries showing maximum gains.