Domestic steel demand has sky-rocketed as consumers have started piling up stocks in anticipation of a price hike. Economic recovery and high industrial output growth are being seen as the triggers behind the likely increase in steel prices. The hike is being planned by steel makers, just two months after reducing rates.
“We are going to increase our prices for flat as well as long products by 5-7% in January as the demand of our products has increased. There could be a further hike in the coming months if the demand remains robust,” said Neeraj Singhal, MD, Bhushan Steel, which announced a price-cut two months ago due to slump in demand and overcapacity.
Steel prices in India and the international market had started rising from the beginning of this year. However, in India the consumers were wary of buying stocks as they had a lot of inventory from 2008 when the Indian economy had witnessed a drastic fall in demand.
But now the consumers want to make the most of the low steel prices and have started to increase their stocks.
A Mumbai-based dealer said, “We are getting feelers from companies as well as the market that prices will go up in January, therefore, we have started to increase stocks.”
Vinod Garg, executive director (commercial), Ispat Industries, said, “Demand in December is better than November by 5-7%. People are buying steel as they have realised that prices will only go up from here.”
“Seeing the market sentiment we are contemplating a price hike for our steel products,” an Essar Steel spokesperson said. The company had cut prices two months back in the range of Rs 1,000-Rs 1,500 for different products.
Abhijeet Naik and Alok Rawat of CLSA, in a December 14 report, said, “We expect end-users of steel to step up purchases in January-March in anticipation of higher steel prices (due to cost-push).”
Jayant Acharya, director (sales and marketing), JSW Steel, said, “Demand has improved slightly in December vis-à-vis November. Prices have bottomed out and will go up from here.”
Acharya said that buying has improved in December mainly because people are more confident of the demand when compared to the previous months. “We are seeing some inventory build-up,” he said.
Comments