JSW Steel will increase prices of both long and flat products by up to 2%, or by Rs700-1,000 per tonne, from January 1, following rise in raw material prices, hopes of better demand and hike in international steel prices, Jayant Acharya, director commercial, told dna.
Other steelmakers like Tata Steel and Steel Authority of India (SAIL) are also likely to raise prices of long products by Rs1,000-1,500 per tonne, a leading steel distributor based out of Mumbai said.
Market is slowly picking up, hope of political stability is improving overall sentiment, he said.
Steel makers are reeling under high raw material costs for sometime.
NMDC, the biggest domestic miner, has increased price twice since October by around Rs300 per tonne each. Railways had also imposed a busy season charge of around Rs200 on freight from October.
Even in the secondary market prices of pellet and scrap have increased by Rs900 and Rs300-400, respectively, Acharya of JSW Steel said.
International scrap, pellet and coke prices have gone up by $30, $20 and $20, respectively.
JSW Steel’s 11 milion tonne tonne Vijayanagar steel plant in Karnataka continues to face iron ore shortage and the company has to source ore from other states like Odisha, Chhattisgarh and Jharkhand which entails huge transportation costs.
Acharya sees iron ore cost going up by Rs400-600 per tonne for final production.
The Mumbai-based company had increased steel prices by around Rs1,000 per tonne in October and has been since rolling over prices due to subdued demand from construction and automobile sector. Steel demand generally improves September onwards following end of monsoon season and beginning of festive season; however demand has remained weak in past three months due to overall weak economy.
While Acharya agreed that demand has remained flattish during the year, he sees slight improvement now. “I am cautiously optimistic, we have seen some pick-up in rural demand following good monsoon, export based manufacturing have also improved. We are also expecting demand from water and oil and gas pipeline projects,” he said.
An analyst with a local brokerage said that demand is still subdued so ideally prices should not be hiked, but January-March is generally one of the best quarter for steelmakers in terms of sales volumes and they are trying to grab this opportunity.
JSW Steel also sees better demand in international markets like the US, Europe and Southeast Asia.