The Hindu Business Line : Steel market abuzz with talks of price hike

New Delhi, July 14 The market is abuzz with the possibility of another round of steel price hike by the primary producers, though there is no official communication yet.

The move comes at a time when uncertainty looms large over the continuation of the Government, which was assured price stability by steel producers till August. The producers had promised to hold prices at a meeting with the Prime Minister in early May.

Secondary producers, who buy hot rolled steel from the primary producers for downstream processing, told Business Line that it is only the quantum of the possible price increase that is being discussed and figures ranging between Rs 2,500 and Rs 3,800 a tonne have come up during informal discussions between the producers and buyers.

“Only one company, Ispat Industries, has indicated to its contractual customers about an increase of Rs 2,500-3,000 a tonne, but it is being said that Essar and JSW too are going to follow,” a senior functionary of the Cold Rolled Steel Manufacturers Association (Corsma) said.

Ispat officials, pointed out that “There is always a difference between the steel sold for domestic purpose and for export use, which is linked to international ruling prices.” Corsma, however, is maintaining that “the steel producers have done away with having two prices. There is only one price now, the increased prices which the companies have indicated would be charged for all bookings made in July.”

The public sector Steel Authority of India Ltd sources said it too is increasing realisations by rationing supplies.

Sources said that “SAIL has memorandum of understandings with tube makers across the country for assured quantities. The company is supplying 40 per cent of the quantity at the agreed price. But for amounts beyond 40 per cent it is charging a premium citing shortage of material as the reason.”

SAIL does a quarterly review of the MoUs, and after supplying 40 per cent to MoU holders the extra amount is divided equally among all the MoU holders. The company is now considering doing the exercise on a monthly basis in the face of excess demand.