Steel Prices may Rise by Rs. 2,000-2,500 a tonne

Steel prices are likely to go up by Rs. 2,000-2,500 a tonne starting September with the sharp rise in raw material cost and signs of a revival in demand.

Currently, the basic steel varieties of hot rolled coil (HRC) and cold rolled coil (CRC) are priced at Rs. 35,000 a tonne and Rs. 40,000 a tonne (including excise duty of 12.5 per cent), respectively.

Large steel makers, including JSW Steel, Essar Steel, Steel Authority of India and Tata Steel, revise prices monthly though they offer special discounts to buyers with large orders.

Key factors

Steel production cost has gone up Rs. 5,000 a tonne in the last eight months with coking coal prices touching $127 a tonne now from $75 in January and zinc costs 50 per cent higher at $2,215 a tonne, said a senior JSW Steel official.

Iron ore prices are up 45 per cent at Rs. 61 a tonne while the 19 per cent increase in the Railways freight rate will lead to additional cost of Rs. 300 crore a year. “We have no other option but to pass on the incremental cost to consumers by increasing prices by Rs. 2,500 a tonne,” he said.

H Shivramkrishnan, Director (Commercial), Essar Steel, said the industry has been adversely impacted by increasing cost of inputs such as metcoke and corex coal that have gone up to $215 a tonne ($140 a tonne) and $110 a tonne ($85 a tonne).

The provisional levy of anti-dumping duty on HRC (hot-rolled coil) and CRC (cold-rolled coil) imports for six months and extension of MIP (minimum import price) on select steel products for two months has given enough room for steel companies to hike prices even amidst weak demand.

Earlier this month, the Centre under the garb of anti-dumping duty fixed MIP of $474 a tonne on HRC and $557 a tonne on HR sheets and plates imported from China, Japan, South Korea, Russia, Brazil and Indonesia.

Similarly, the anti-dumping duty on CRC will be the difference between $594 a tonne and “landed value” of imports from China, South Korea, Japan and Ukraine.