Company’s profit margins have been under pressure on account of surging coking coal prices
JSW Steel, India's third largest steel producer, has increased its product prices by around 6%, a senior official of JSW Steel told Moneylife. This is the second price hike by JSW in five weeks and comes after the Steel Authority of India Limited (SAIL) also hiked prices last week.
"Yes, we have increased our product prices by around 6%, effective from 5th February," said Sharad Mahendra, senior vice-president, marketing and sales, JSW Steel.
Last month state-owned SAIL increased prices of its long and flat products between Rs1,000 and Rs3,000. JSW had hiked prices of its flat products by around 5% on 3rd January. Flat products account for around 70% of JSW's production.
In January, Moneylife reported that JSW would increase prices again in February. (Read 'JSW Steel to again hike prices in February due to rising input cost',)
Sajjan Jindal-controlled JSW Steel's profit margin has been under pressure due to rising raw material costs. The company's consolidated profit for the third quarter ended December 2010 dropped by 32% to Rs292 crore compared with Rs430 crore in the corresponding period of the previous year, due to higher input costs.
JSW Steel's profit for the fourth quarter is also expected to be under pressure as the company almost totally depends on imports of coking coal.
The prices of raw materials-mainly coking coal-have been surging in international markets as the supply of the commodity has been disrupted due to flooding in Queensland, Australia. The spot price of coke from Australia has exceeded $300 per tonne and is expected to reach $400 a tonne, which would be a new high since 2008.
India imports about 70% of its coking coal requirements, and nearly 85% of it is from Australia.
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