Three of India’s top steel makers hiked prices on Wednesday due to high input costs and increasing international prices. The 3-4 per cent increase is unlikely to have a major impact on user industries such as construction, capital goods and automobiles. While construction companies have already hedged steel prices to nullify the anticipated hike, auto firms have already announced price hikes.
Tata Steel, Essar Steel, and JSW Steel hiked prices for hot rolled coils by Rs 700-900 per tonne with immediate effect on Wednesday. Hindustan Times had reported in its December 20 edition that domestic steel firms were planning to increase the prices in the first week of January. Analysts see another round of increase in prices by the end of March.
“There is an increase in international prices and input costs are moving up. We cannot pass it on the current costs,” said MV Sheshagiri Rao, director finance, JSW Steel. Globally prices have gone up by $30-40 per tonne while raw material costs have almost doubled during the calendar year.
According to analysts, the current demand for steel is expected to continue with the boom in construction and infrastructure sectors. “Currently, the demand is very good for steel. However, raw material cost push-impacting margins is forcing companies to increase the prices. This will help them to continue margin expansion, though the companies may not be able to pass the entire price hike to the margins,” said Chirag Khasgiwala, analyst with Emkay Stock Broking.