With the three-month voluntary industry moratorium to hold steel prices ending on August 7, steel manufacturers in the country may increase prices by as much as Rs 1,500 to Rs 3,000 per tonne thereafter, experts say.
However, the price hike may not be effected in one go. According to a Mumbai-based analyst, “Steel players may not increase prices at one go as they will not go against the government, taking into consideration the rising inflation which is at an all time high of 11.98%. Also, steel players require favour from the government regarding the allotment of mines and hence will not make a significant hike in prices.”
Steel manufacturers whom FE contacted declined to reveal any information on the proposed hike. However, it seems that most of them are waiting as to who will bell the cat first.
JSW Steel on Thursday had said that the company’s margins have been squeezed significantly on account of rise in raw-material costs. “We are looking at a reasonable price increase,” Sajjan Jindal, MD of JSW Steel Ltd, had said.
When asked about a possible price hike, Tata Steel CFO Kaushik Chatterjee said, “The company will take a view on what needs to be done after taking all aspects, including inflation, into consideration. International prices are higher by $350 per tonne.”
Currently, contract coking coal price is reigning at $300 per tonne, an increase of 200% from $98 per tonne in March and spot prices are hovering at $350 per tonne.
Going forward, there is a possibility that government-owned NMDC, the country’s single largest iron ore producer and exporter might increase iron ore prices again. NMDC had raised iron ore prices by 47.5 % with retrospective effect from October 1, 2007. Currently, iron ore prices in the spot market are $110 per tonne FOB India.
With inflation rising, the steel ministry is keeping all doors open to ensure steel prices are kept under check, following which the ministry of steel has asked the Steel Authority of India Ltd (SAIL) not to hike steel prices in national interest after the voluntary industry moratorium on price cap ends.
