The Hindu Business Line : Costlier ingots may lead to hike in prices of steel structurals

New Delhi, April 28 Medium-sized steel companies are contemplating an increase in the prices of TMT bars and other steel structurals manufactured by them, in the beginning of May, thanks to the upward trend in steel ingot prices in the last week of April.

Steel ingot prices were on a downward trend since the last week of March and hit the nadir on April 23. From April 24, prices in the spot market started moving up across the country.

During the last three days, ingot prices moved up in the range of Rs 250 (lowest increase in Kolkata) and Rs 1,890 (highest increase in Gaziabad).

A large number of TMT makers, both branded an unbranded, are planning to increase their prices in May to pass on the increased cost. However, none of them had reduced prices when ingot prices went down by around Rs 4,000-5,000 per tonne over a period of one month.

Regional brand price

As of now, prices of TMTs manufactured by strong regional brands like Kamdhenu, Rathi, Goel, Barnala, Ambala, and Jaibharat are lower by around Rs 3,000-5,000 per tonne compared to Tata Steel’s products. Unbranded TMTs are sold at rates lower by around Rs 8,000 per tonne, compared to Tata Steel prices.

Increase in prices of products manufactured by the medium-sized companies would directly hit the common man because it is these items that are used for building houses and other commercial and residential properties because the two largest manufacturers — RINL and Tata Steel — sell most of their produce to the big infrastructure projects.

According to the manufacturers, the present price rise is a correction of the aberrations that had set in the market following talks of excise cut.

Fear of excise

According to Mr Satish Agarwal, the Chairman and Managing Director of Kamdhenu Ispat, “the fear of excise cut was pulling down prices in the local markets abnormally to ensure that when the cut comes, there is no major impact overnight. But with rising prices, the re-rolling units will normally pass it on to the customers.”

Explaining the economies of the re-rolling units, Mr Agarwal said that for these products, the rolling cost, which is the cost of conversion of ingots or billets into long products, is around 13 to 14 per cent of the cost. Their profit margins are very thin. “So there is a strong possibility of prices going up,” he said.

Sources in the National Commodity & Derivatives Exchange said that spot market prices have increased in the range of 1 per cent to 6.75 per cent in various centers since Wednesday.

“However, prices are still substantially lower than their March 24 peaks,” officials pointed out.

More Stories on : Steel | Steel

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page