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Steel makers to hike prices in new year
Rise in coking coal prices, a key raw material for manufacturing alloy, reason for the decision
Mumbai/Kolkata, 2 January: With demand for steel not so strong in the domestic market, primary producers of the alloy are planning to pass on only a part of the Rs. 6,000-a tonne hike in prices planned in early December.
The rise in international coking coal prices, a key raw material used in the making of steel, had prompted steel producers to mull over a steep hike for January. “A combination of market appetite to absorb the hike and cost push will decide product price increase for January and this is not going to be anywhere close to Rs. 6,000 per tonne,” Jayant Acharya, director (commercial & marketing) at JSW Steel, told Business Standard.
“Margins of steel companies will be hit but that can’t be helped. ”The Sajjan Jindal-led company will be raising prices in a range for various long and flat products and also for those products in contract. The company is still deciding the quantum of the hike. Meanwhile, Essar Steel is also looking to raise prices but declined from mentioning the exact quantum. “Our price revisions will be in line with the market for January,” said Vikram Amin, executive director (strategy & business development).
According to Joint Plant Committee data, India’s finished steel consumption grew three per cent during April-November to 54.24 million tonne (mt) over the corresponding period of last year. Consumption in November stood at 6.12 mt, up 3.8 per cent from the corresponding period last year but down 14.3 per cent sequentially. Coking coal prices have come down to about $250 a tonne from the peak levels of $320, but steel prices have enough headroom to increase, said industry officials. “In December, domestic steel producers had raised product prices by seven-nine per cent across all categories. In January too, it should be same,” said Peeyush Gupta, vice-president (sales & marketing), at Tata Steel. “Though steel prices have been increased, they are still lower than 2014 price levels.”
Apart from the rise in coking coal prices, an uptick in international steel prices is also prompting domestic producers to raise product rates, said officials.
“Initially, the domestic industry took protection from the government since global prices were lower and dumping was happening in the local market. They raised prices then. Now, the industry is citing rise in global steel prices as one of the factors to hike product prices here. So basically, they have been raising prices all through,” said a Mumbai-based trader on condition of anonymity.