Steel prices surge on firm demand

Prices across segments rise by Rs 500-2,000 a tonne

Steel majors "" long and flat product manufacturers "" today raised prices in the range of Rs 500-2,000 a tonne, on the back of demand firming up in the domestic as well as the international market.

Jindal South West increased hot rolled coil (HRC) prices by Rs 2,000 a tonne, while Tata Steel raised spot prices of HRC by Rs 1,500-2,000 a tonne and galvanised steel products by Rs 750-1,000 a tonne.

Tata Steel officials said the prevailing market conditions forced the price hike. Non-contract products across all categories account for 20-25 per cent of its output.

Both Essar Steel and Ispat Industries hiked prices by close to Rs 2,000 a tonne, while long products major Rashtraiya Ispat Nigam (RINL) raised its product prices by Rs 500-700 a tonne. Steel Authority of India, too, raised prices by Rs 1,000-1,500 a tonne in the long and flat categories.

Seshagiri Rao, CFO, Jindal South West, said the price rise was driven by the upmove in the international market. Even after today's price hike there is a gap of Rs 1,000 between international and domestic prices, he added.

Y S Sagar Rao, CMD, RINL, said the price hike would be effective from today. He said the rise would be in the range of Rs 500-700 a tonne.

The finance minister had yesterday re-imposed 5 per cent customs duty on iron and steel melting scrap. This will increase cost of production of steel producers like Essar and Ispat, which use scrap in their electronic arc furnaces. Even secondary producers such as Rungta Steel and Bhusan Steel, and stainless steel producers like Jindal Stainless will be hit by higher input costs.

The Budget has reduced custom duty on alloy steel, aluminium, copper, zinc, ashes and residues of copper and zinc, tin, base metals and calcinated alumina.

However, the cut was not up to the expected levels as pointed out by Essar MD in his statement yesterday: "The sector welcomes the duty corrections... However, the rate cuts are below our expectations and will have only a marginal impact on our costs."

The domestic rise in steel prices follows the hike announced by China's largest steelmaker Baoshan Iron and Steel, which raised prices for key steel products by more than 10 per cent.

South Korean steel major Posco announced a price hike in the beginning of February. China's Baosteel recently announced a 18 per cent price rise, while AK Steel Holding Corp announced a second price hike in February.