The Hindu Business Line : Steel cos may raise prices

New Delhi March 26 A strong supply-demand mismatch has developed in select steel products during the past few weeks and this could become a trigger for primary steel manufacturers to increase prices.

Steel makers had increased the prices immediately after the Budget and had later rolled them back by half following the intervention of the Finance Minister, Mr P. Chidambaram.

Sources in the primary steel manufacturing industry told Business Line that there were shortages ranging between 10 and 15 per cent in various flat products as well as coils and long items.

"Particularly for heavy plates that are 16 cm thick or more, there is almost a 15 per cent short supply in the northern region. And given the weight, their imports are also very expensive," officials in steel companies said.

These heavy plates are mostly used in the manufacture of heavy machineries such as dredgers, excavators, mining machineries, army tanks and power equipment. They are also also extensively used in the Metro railway construction, company officials said.

The general trend is rising and unless the Government is cautious, prices could firm up again, industry officials said.

Another hot-rolled product where current supplies are around 10 to 15 per cent lower than demand are hot-rolled coils of width 2mm and less.

Almost the entire production of these thin hot-rolled coils goes to the cold rollers, who further roll them into thinner coils of up to 0.15 mm thickness. These have various applications in white goods, power equipment, interior decoration and in automobiles, steel company officials said. "For example the doors of Maruti vehicles are made of 1mm or 1.2 mm cold rolled sheets," they said.

Reinforced bars

The third group of steel products where a large number of small players are involved is reinforced bars used in construction. Industry officials said that the supply was lower by around 10-15 per cent across the northern region, which is seeing a construction boom. While the long products from large integrated steel mills are mostly supplied through long-term contracts, the reinforced bars market is largely dominated by the smaller mills.