Steel prices set to rise for a fourth time in three months
13 January 2020
Steel producers are set for yet another bout of price hike next month, after third successive months of price hike, on the back of strong demand and an increase in input costs. Steel prices are expected to go up by about Rs2,000 per tonne next month, after steel companied raised prices by as much as Rs1,750 per tonne early this month.
Despite the prices going up in last two months, demand has been holding strong in both automobile and infrastructure sectors on restocking by dealers. Following this, steel companies have intimated that Hot-rolled coil prices will be increased to Rs 700-1,000 a tonne in January, said a stockist.
In November, steel manufacturers hiked prices for the first time in this fiscal by Rs500-750 a tonne and followed this with another rise of Rs750-1,000 this month.
Steel prices were falling consistently since April and touched a low of Rs32,500 a tonne in September from the peak of Rs45,000 a tonne late last year.
Steel producers have been gaining from strong demand – both at home and abroad – and relative slackening of imports, with support from government.
Government’s measures to revamp infrastructure and consumption are expected to revive demand for steel, more specifically, alloys from carmakers and construction companies.
Steel longs for February were trading at Rs32,020 per tonne on Thursday. Analysts said expect price to increase to Rs35,600 per tonne this year. Spot prices in Punjab stood at Rs32,500-32,600 a tonne last week.
Domestic steel prices rose 2 per cent in the past two weeks alone, while export prices for Indian steel rose by 7 per cent.
Globally, steel prices have gone up by $60 to $70 (Rs4,200-Rs4,900) and this is expected to have a rub of effect on Indian steel prices. Steel companies have hiked prices by Rs1,000-Rs2,000 a tonne.
The rise in steel prices will boost companies’ margins as the benefit of fall in raw material prices will kick-in. Coking coal prices have fallen by $60 a tonne to $130 while iron prices dropped to $90 a tonne from $120 a tonne.
With the improvement in demand and prices going up, steel companies profit may be better in the March quarter than in third quarter of this fiscal, said an analyst.
Stocks of Tata Steel, JSW Steel, Jindal Steel & Power and SAIL climbed 3.5 per cent to 10 per cent on Thursday after the announcement on boosting infrastructure.