JSW, SAIL and Essar may hike steel prices by 2% to 3% within three days
Sharad Matade 12 January 2011

This would be the second such hike in January—rising raw material prices and the demand-supply mismatch may further worsen the scenario

Surging prices of raw materials-mainly coking coal-have started showing their impact, as Indian steel companies are likely to increase prices by 2%-3% within the next two to three days.

"JSW Steel will increase prices of its products by 2%-3% by the middle of this month," Sharad Mahendra, senior vice-president, marketing and sales, JSW Steel, told Moneylife.

"Steel Authority of India Limited (SAIL) has decided to increase prices by Rs1,250 per tonne-effective from 10th January-but the official announcement is yet to be made," said a source close to the development, who preferred anonymity.
On 3rd January, JSW and Essar Steel increased prices of flat products by around 4%- 5%, while SAIL decided on a 3% rise in the price of its products.

But Essar Steel preferred not to comment on its future strategy. A spokesperson from Essar Steel told Moneylife, "Right now, we are reviewing (the) market situation. Within the next couple of days, we will have (a) clear picture."

Prices of coking coal, the main ingredient for making steel, have been going up in the international market, as mining operations and shipments from Queensland, Australia, the main supplier of the commodity, have been hit by the unprecedented floods that have swamped the region (See: http://moneylife.in/article/4/13075.html).

"Prices of coking coal and iron ore are increasing at a rapid pace, and this has forced us to go in for another price hike this month," added Mr Mahendra.

Indian steel companies expect contracts for coking coal prices in the next quarter to reach $300 per tonne from the current January-March contract prices of $225 per tonne. In spot markets, coking coal prices have already crossed $270 per tonne.

Margins of steel companies are already under pressure due to high raw material costs. However, a few players will pass on the hike to customers. "We will definitely pass on the hike to customers as our margins are already coming down," said Mr Mahendra from JSW Steel.

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