Integrated steel producers such as Steel Authority of India, Tata Steel, JSW and Essar Steel are set to increase prices from January 1. While a clear confirmation was not available from other companies, JSW Steel, which is the third-largest producer, confirmed that it will be increasing the prices of its products by up to 2%, or R700-1,000 per tonne, across various segments.
Generally, all integrated steel producers increase and decrease prices together, though the quantum may differ.
The hike comes after the companies kept steel prices unchanged for one full quarter. Between August and September, steel companies had hiked the price in the range of 5-6%, or R2,500-3,000 per tonne.
?We have seen that the price of steel in the secondary market has already risen by about R500-1,000 per tonne in the last one month. Plus, our input costs in terms of iron ore, coking coal and freight has also shown some increase. Therefore, there is an opportunity to take a price hike,? JSW Steel director (commercial and marketing) Jayant Acharya said.
He said JSW expects other steel companies, too, to pass on the impact of input cost from the month of January.
However, steel dealers feel this kind of rise will be difficult to absorb by the market as there is still no end user demand.
?There are companies who are ready to offer over R1,000 per tonne of discount on some special products if there is a bulk order from a buyer in the range of 4,000 tonnes,? said Vivek Gupta, a prominent steel dealer in Mumbai and a top office bearer of Steel Chamber of India. He refused to name a company that was offering such discount but said since the fourth quarter is just about to start, companies are trying hard to push volumes to meet year-end targets.
?So far there has been no official communication from any company but we have already got feelers that a price rise is coming. This will be difficult for us as we also have to compete with rolling mills and imported steel,? another dealer said.
Acharya said a price rise is inevitable as the cost of almost all products have increased sequentially on a monthly basis.
He said price of scrap has moved up by $20 per tonne and that of coke (a major ingredient in steel making) was up by $30 per tonne internationally. This has led to the price of steel in the global market to inch up by around $15-20 per tonne.
?We are already getting this price in the international market,? he said and added that with increasing demand of galvanised steel, TMT and rebars, an increase in the price is definitely warranted.
Ramesh Iyer, vice-president (product development), NCDEX ? the first company in India that started steel trading and acts as a benchmark for secondary or spot market prices ? said the price in Mandi Gobindgarh has, of course, risen by R500-600 per tonne since Monday.
?Secondary market is the most actively-traded market in the country and largely reacts to small developments. While input cost pressures are there and price has risen, sellers still feel the end-user demand is not there and a price rise could largely be temporary,? he said. Iyer also said it could be difficult for the companies to sustain such a price rise for long and may have to eventually resort to rebates on large volumes.