The Hindu Business Line : Steel price hike looms large as moratorium nears end

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3-month moratorium to hold prices ends on Aug 7.
Most pvt firms have hiked contractual prices in July.
SAIL, Tata Steel have maintained their prices.

Ambarish Mukherjee

New Delhi, July 31 The possibility of an imminent rise in steel prices looms large as the self-imposed moratorium to hold prices by the steel industry ends this week.

Most of the private sector companies have already increased their contractual prices in July, in certain cases even to the extent of Rs 10,000 a tonne. However, public sector Steel Authority of India Ltd (SAIL) and Tata Steel had maintained their prices, market sources said.

fund flow impact

According to estimates given by sources in SAIL, if it holds prices beyond the three-month moratorium, it will have an impact on the fund flow for the company’s long-term expansion plans.

“Earlier, we were getting coal at $98 a tonne but from July, it is $300 a tonne and freight charge is also up by $15. So in rupee terms, the overall impact on account of coal only will be Rs 9,330 a tonne,” a SAIL official said.

Added to this, there would be around Rs 1,200-1,300 a tonne increase in the costs of limestone and dolomite procured domestically plus the cost increase in imported ferro alloys. Taken together, the impact will be close to Rs 12,000 a tonne, the official said.

A senior official in one of the major producers said that “though the three-month period promised by the steel industry to the Prime Minister for holding prices ends on August 7, there is pressure not to increase prices even after the moratorium ends.”

Market sources said that till Thursday afternoon, the companies have not communicated anything regarding next month’s prices.

GOVT RESTRAINS SAIL

The Minister for Steel, Mr Ram Vilas Paswan, on Thursday expressed the hope that the steel industry will not raise prices after August 7 in national interest. He said that SAIL has been asked not to hike prices and also urged other steel manufacturers to cooperate in the present situation.