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Phalguna Jandhyala

New Delhi, Nov. 3 The two major public sector steel companies, Steel Authority of India Ltd (SAIL) and Rashtriya Ispat Nigam Ltd (RINL), have hiked prices for the third successive month. However, the private players have resisted such a move so far.

Industry sources point out that SAIL has not directly increased the prices, but cut down on rebates that they have been offering. However, when contacted the company was not willing to comment on the issue.

RINL, the holding company of Vizag Steel Plant, on the other hand, has increased prices across most of its product categories.

Analysts, however, feel that the move by the private players to hold the price line is only a short term phenomena and prices would rise in the near future.

Domestic steel companies in the last two months had increased prices twice and each time it was between Rs 450 and Rs 800 a tonne.

“The appreciation of the rupee has forced companies not to hike prices. Steel imports are usually negotiated in dollar terms and with the appreciation of the rupee, domestic manufactures have been forced to keep their prices on par with landed import prices,” sources said.

A RINL official told Business Line that the prices of round steel products have been increased between Rs 200 to Rs 500 per tonne, while on the thermo mechanically treated (TMT) bars there has been hike of Rs 500 to Rs 1,000 per tonne. On semis, the company has raised prices by Rs 800 per tonne. There was, however, no change in the prices of structural products.

The official added that they increased prices due to the rise in the input costs. “The increase in the ocean freight has resulted in rise of the import costs and also the rise in the metallurgical coke prices has forced the company to hike prices. Also, looking at the increase in demand we have increased the prices,” he said.

Analysts also point out that there could be further increase of between five to seven per cent in the prices early next year.

“In the short term the prices are expected to rise due to the busy season ahead in the construction and manufacturing sectors. But due to the surge expected in the prices of iron ore there could be a five to seven per cent hike early next year. Also, international prices are expected to be firmed up in the next two months,” sources pointed out.

Currently, steel prices in India are around Rs 27,500 per tonne, close to the all-time high prices witnessed during April-March 2006, when it touched close to Rs 30,000 per tonne.

“Iron ore prices are expected to rise by 30 to 50 per cent in the long-term due to supply constraints related to transportation of minerals. Also, China is expected to renew its iron ore supply contracts in the next two months and this is going to increase the cost further,” the official said.

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