India’s top steelmakers, JSW Steel, JSPL, AM/NS and Tata Steel, might increase prices by up to Rs 4,000 a tonne on the benchmark hot-rolled coil from April after rates climbed in the global markets, particularly in China.
“The decision is yet to be made, but we are planning somewhere around Rs 4,000 per tonne from April 1 to match up with the international markets and to cover the rising cost of iron ore,” said an executive at one of the top steel players.
The steel mills have reduced the prices by Rs. 1,000 per tonne in the beginning of March on the back of a reduction in import prices after finance minister Nirmala Sitharaman brought in the veer of measures like the customs duty reduction to 7.5% from 12.5% on semis, flat, and long products of non-alloy, alloy, and stainless steels, said an analyst who will not wish to be named. “The prices were also soft due to slow economic activity in China after Lunar New Year,” the person stated.
Though, on the back of rising prices in China and other international markets, Indian steel mills will be increasing prices – the 13th such raise since the pandemic-led lockdowns began. The current HRC price levels are in the range of Rs 56,000
a tonne and will reach Rs. 58,000-Rs.60, 000 after the new hike, the highest since the steel unicycle in 2008, experts say. Prices during the same period last year were around Rs. 35,000- Rs. 36,000.
“Globally, the commodity price benchmark has changed and if India does not match up to that, we are losing out,” said another executive from a top steelmaker, requesting anonymity. “Also the gap between export prices and domestic prices is around Rs.2,000-15,000 a tonne, and we need to match that. We might have to take a hike of at least Rs. 4,000 to Rs. 6,000 to match the gap,” the executive added.
Freight on board (FoB) China price level is around $800 per tonne and EU was around $920 per tonne and US around $1400 levels with prices nearly doubling in a year.
State-run iron ore producer National Mineral Development Corporation (NMDC), on Monday, announced a 5% hike in lump ore at Rs. 5,350 per tonne and fines increasing last March, NMDC iron ore prices were around Rs. 3,150 per tonne for lump and Rs. 2,860 per tonne for fines. “There could be a significant price hike in the coming month. Internationally, prices are up and naturally, we will see domestic prices are going up,” said Edelweiss research analyst Amit Dixit.
Demand is also back across the sectors and some players are exporting, Dixit added. Several leading automakers – Hero MotoCorp, Maruti Suzuki and Nissan – have taken price hikes to tackle higher costs of flat steel.
Yet, the analyst believes the price hikes will lead to enhanced earning for the steelmakers for the next fiscal.
“The outlook for higher steel prices…will lead to an accelerated deleveraging for Indian producers with potential to kick-start CAPEX cycle earlier than expected,” said Morgan Stanley in a research report on Wednesday.
Higher international steel prices and tightness in supply in the domestic market should support supercycle profitability, the report added.
