The Hindu Business Line : Global steel prices see steady rise

Mumbai, May 5 Global steel prices continue their upward march for the 12th time in a row even as the Indian steel companies are finding it hard to pass on the increase in raw material cost to the end consumer.

Over the last fortnight, hot rolled coil (HRC) prices in the US have gone up $94/tonne to $1,097, while cold rolled coil (CRC) rose $76/tonne to $1,194, a gain of 6.8 per cent.

The increase in prices is primarily driven by increasing raw material costs and shortage of physical metal.

Mr Sajjan Jindal, Vice-Chairman and Managing Director, said “Though export of value added steel products will be profitable, despite the recent hike in the duty we concentrate on to feed the domestic demand.”

JSW Steel exports have already fallen to 30 per cent in fiscal 2008 against 60 per cent of its total production last year. It will be further brought down to 10-15 per cent this fiscal, he added.

In Europe, steel prices have shown persistent strength on the back of surging raw material costs. HRC prices in western Europe have increased by $59/tonne to $1,066, representing a gain of 5.9 per cent, while CRC prices jumped by $63/tonne to $1,179.

The rise is the sixth straight increase in HRC prices in Europe since January 2008. In the last 3 months, HRC prices in Europe have increased from $713/tonne in January to $1,066/tonne.

On the other hand, responding to the Government efforts to curb steel prices by cutting customs duty on certain inputs, two steel companies — JSW Steel and Ispat — announced reduction in prices in the range of Rs 400-700 a tonne.

China prices

Steel prices in China, one of the main price drivers, have depicted a relatively moderate increase as compared others. HRC prices are currently quoted at $671 a tonne, up 2.1 per cent, while CRC was almost flat at $796 a tonne, up 0.8 per cent over the last fortnight.

Prices have remained stable in China as exports fell substantially due to high duties imposed by the Government.

According to recent data from General Administration of Customs, China, steel exports in February were to the tune of 3.11 million tonnes (mt), down 25 per cent month-on-month (it is down 29 per cent year-on-year). In March, China steel exports were up 33.4 per cent at 4.15 mt.

“However, with the current round of price hikes globally, we believe Chinese steel mills might (take a) re-look at the export markets, with the only factor restricting exports being the high trade surplus with US,” said Mr Vishal Chandak, research analyst, Emkay Stock Broking.

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