Taking a cue from primary producers, secondary steel makers have also decided to pass on higher raw material and energy costs to consumers.
Major secondary and specialised steel producers have raised their product prices by 5 to 10 per cent, effective immediately. Delhi-based Bhushan Steel has raised product prices by Rs 2,000 a tonne across all product categories. Uttam Galva Steels, the country’s leading manufacturer-exporter of value added steel, and Topworth Group, a Mumbai-based secondary producer, have revised their product prices upwards by Rs 3,000 a tonne.
According to industry sources, primary producers, including the public sector Steel Authority of India and private sector behemoth Tata Steel, have raised prices of both flat and long categories by Rs 2,500 a tonne and Rs 1,000 a tonne, respectively, in the past three to four days.
More, the government has levied an export duty of five per cent on fines and 10 per cent on lumps. This has raised market sentiment, with a feeling among producers that demand for steel and its raw material has increased. And, construction demand is expected to resume in North India by the end of January, when the weather would be better.
“We have no option but to pass on input cost to customers,” said Vimal Kumar Somani, Director of the Topworth Group. Scrap prices have surged to $370-375 (Rs 17,100-17,325) a tonne from $290 (Rs 13,400) a month earlier. Sponge iron today zoomed past Rs 18,000 a tonne in Raipur, India’s largest producing hub, from Rs 12,500 a tonne in November.
The bullish sentiment is expected to continue in the near future, said Anil Suraj, a ferrous metal analyst based in Mandi Gobindgarh, India’s largest steel market yard. In the past 15 days, ingot prices have jumped by Rs 6,000 a tonne, to Rs 29,000 a tonne, in anticipation of higher input cost.
Somani said crude oil and coal, indicators of movement in steel, have surged dramatically in the past month. Crude oil hit a 14-month high on Wednesday to trade at $82 a barrel in New York. Coal, the major fuel for steel production, was $116 a tonne today from $97 towards the end December.
According to Somani, the cost of secondary production has jumped to Rs 26 a kg. Steel producers, in turn, are selling finished products at Rs 30-31 a kg.
