Rashtriya Ispat Nigam (RINL) said it would raise price of its products by up to R1,000 per tonne with effect from March 1 to tide over the increased iron ore costs and freight charges.
In view of the increase of input cost of prices of iron ore and also steep rise in railway freight, Rashtriya Ispat Nigam Limited, has decided to increase the prices of various products by R750 to R1,000 per tonne with effective from March 1, 2014, the PSU said in a statement.
Essar Steel is also likely to raise product prices by around R1,000 per tonne next month, sources said, adding that this is primarily cost push along with some demand uptick in the fourth quarter.
The company officials could not be contacted for comment.
Another private steelmaker JSW Steel has already announced a hike of R750 a tonne across product categories from next month.
The proposed hike will be the third this year as most of the domestic steel makers have raised prices by a total of R2,500-3,000 per tonne in January-February.
While rise in input costs and rail freight charges were the primary reasons, demand surge in recent months may also have acted as catalyst for them to jack up prices.
The growing shipments to export markets, which has helped Indian steel mills to erode the oversupply situation in the domestic market, is also instrumental for the price rise.
Industry experts, however, are sceptical about complete absorption of price hike by the market. Given the weakness in the steel consumption, it remains to be seen whether such price hike is sustainable, Jayanta Roy, senior vice-president and co-head, corporate sector ratings at Icra, said.
Ex-factory prices of long products such as TMT bars and structures are hovering in the range of R37,000-39,000 per tonne, while prices of flat products like HR-coil and CR-coil are at about R39,500 and R43,500 per tonne, respectively. Flat steel products are used in automobiles and consumer durables, while long steel products are used in the construction sector.