After a period of stability over the past few months, steel prices are all set to rise again from September. Hit by low demand in the monsoon season and high input costs, the domestic steel manufacturing companies plan to hike prices marginally by about 3-5% from the next month.
Steel companies have not raised prices for past three months with the last price increase in May. ?Steel prices have been going down for a few months putting pressure on margins. The prices are most likely to go up next month. The quantum will be known only by next week or so,? Vikram Amin, executive director (strategy and business development), Essar Steel, told FE.
According to industry experts, the ban on mining in Bellary will not contribute to increase in prices as the companies have inventories. But prices may increase by $25-$30 per tonne due to a rise in demand in large steel markets like China.
?The lean season is getting over and the steelmakers are now looking at having some margins now,? said AS Firoz, chief economist at the economic research unit of joint plant committee.
Benchmark steel prices as calculated on the basis of the prices of HR sheets and HR coils, which are hovering at around R39,000 per tonne. These prices have been moving southward since mid June.
Speculation was rife that steel prices would go up due to the partial ban at Bellary mines. However, a senior NMDC official said that the ban may not have an immediate effect on steel prices as the government-owned company is able to provide sufficient supply of iron ore to the big steel makers. ?I don’t think there would be any impact on prices because of Bellary, especially because there are not many big players and who ever is there, we have been able to supply sufficient iron ore to them. The steel companies have stocks as well. So there is hardly a case for a price hike on the wake of the ban,? said the official who didn’t wish to be named.
Some steelmakers see prices going up by less than 5% in the next few months. ?The coking coal and iron ore prices are quite stable. There may be a hike of 3-4% by October for some products but it would not be an abrupt hike.
The Bellary ban may lead to scarcity of iron ore, but the consumption of steel has also gone down in the recent past. So, even if it picks up a little, there would be enough supply to meet the demand,? said VR Sharma, CEO and deputy managing director (steel) of Jindal Steel and Power.