Even as domestic carmakers are eyeing another round of price increase, citing rising cost of inputs, the steel industry has countered that prices of the raw material have actually gone down by over 10 per cent in the last quarter.
Steel prices have softened from Rs 37,000 per tonne for hot-rolled coil in May to Rs 31,000 per tonne in July, a decline of 16 per cent. Prices of TMT bars have also come down from Rs 38,000 per tonne to Rs 33,500 per tonne during the same period: down 12 per cent.
"During the first quarter of this financial year, steel prices were impacted mainly because of low-priced imports. Driven by surging imports, domestic steel prices declined by around 12-15 per cent even though raw material prices had shot up," said C S Verma, chairman, Steel Authority of India Ltd.
"Customers were also resorting to just-in-time purchases to leverage their finances better. Domestic prices of both flat (used in automotive and consumer durables sectors) and long steel products (used in real estate and construction) have now bottomed out."
Though steel prices are likely to firm up in the near future, some consumer durable manufacturers, such as LG, have already increased prices citing rising steel prices.
"We have increased the prices in June by up to 1 per cent and we have no immediate plans to increase it any further," said Y V Verma, chief operating officer, LG Electronics India. "If there has been any steel price decline, then it will only be factored in future."
Car prices have gone up thrice already this year following a 2 per cent increase in excise duties and the onset of stricter emission norms in April, and another round of hike looks imminent.
"The key challenges for the industry as a whole are the rising commodity prices although they have stabilised somewhat in the last 2-4 weeks," said Pawan Goenka, President, Society of Indian Automobile Manufacturers (SIAM).