Steel firms to hike rates

The domestic steel prices are set to rise in September, with a hike of Rs 500-1,000 a tonne in hot rolled coil (HRC) rates from the beginning of the month.

This will be the first rise in prices in the financial year and after the drop in July by the same amount.

An industry source said while the price hike in September would be in the range of Rs 500-1,000 a tonne, in October, the increase could be much more, given the global demand. The ruling price of HRC in the domestic market is Rs 26,000 a tonne, while the landed imports rate is around Rs 29,000 a tonne.

"Prices could touch all-time highs this year," said sources. The all-time high for European HRC was $640 a tonne and that is expected to shoot up to $680-700 a tonne by January.

Industry sources cited global demand and large-scale consolidation in the industry for the proposed price hikes.

Globally, companies have already announced a $20-40 a tonne increase in prices from September.

Sources also said that iron ore prices had shot through the roof. According to a steel industry source, the China Chamber of Commerce of Metals Minerals and Chemicals Importers and Exporters released the average reference prices for import transactions of ore with 63.5 per cent iron content concluded last week and there has been an increase of 8.6 per cent in FOB prices over the last week, 25 per cent in August, 80 per cent in 2007 and more than 94 per cent in the last one year.

A source said the raw material increase would also have to be factored in the pricing since most of the steel companies did not have access to captive mines.

An analyst pointed out that no matter what the extent of increase in September, it would be an indication that the market was bouncing back.

Steel prices were reduced by Rs 500-1,000 a tonne following a stabilisation of global and import prices due to appreciation of the rupee against the dollar in July.

This was preceded by a partial rollback in prices in March due to intervention from the government to rein in inflation.