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In a surprise move, steel companies have hiked prices of hot-rolled coils by ₹750 a tonne to ₹36,250 and of cold-rolled coils by ₹500 a tonne to ₹41,000 on the back of rise in iron ore prices and higher costs incurred due to the Covid pandemic.
The increase in steel prices comes despite the tepid demand due to the monsoon season and a slowdown in infrastructure projects. Steel companies expect the price hike to help them sustain profit amid weak demand. Steel companies have been struggling to keep production going due to logistics issues and rising Covid cases near the plants. Tata Steel’s production was down 34 per cent in the June quarter to 2.99 million tonnes against 4.5 mt in the same period last year, while sales volume dipped 26 per cent at 2.92 mt (3.96 mt).
JSW Steel reported a drop in crude steel production to 2.96 mt (4.24 mt).
Anti-dumping duty
Last month, the government imposed anti-dumping duty on certain value-added steel products to curb excessive cheap imports and support the struggling domestic industries hit by the pandemic. A duty of $13.07 a tonne to $173.10 will be applicable for five years from October 15 on flat rolled products, plated or coated with alloy of aluminium and zinc, originating from China, Vietnam and Korea.
NMDC had increased prices of lump iron ore (65.5 per cent Fe) and fines (64 per cent Fe) by ₹100 to ₹2,450 a tonne and ₹2,160 a tonne, respectively, for this month due to firm trend in the international markets.
Iron ore futures in Singapore surged to over $100/tonne from $80 in April-May after Brazil’s Vale SA was ordered to suspend operations after its workers contracted Covid-19. Given the disruption in supplies from Brazil, international iron ore prices are expected to hold above $100 till August.
NMDC implements price hike after cumulative price cut of ₹900 a tonne in April and May amid weak domestic demand. Domestic iron ore prices were at a 45 per cent discount to import parity prices in June compared to the historical discount of 10 per cent. The marginal rise in iron ore prices will narrow the discount between international and domestic prices.
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