Jindal Steel hikes prices by 7-8 per cent

Steel major, Jindal Steel & Power Ltd (JSPL), has initiated a 7-8 per cent hike in product prices by Rs 5,000 per tonne in March (over February prices).

The price hike across categories like hot-rolled coils, TMT bars, structural steel and the entire product range (both long and flat) follows an increase in energy costs (including Australian coking coal) and freight rates over the last three weeks, following Russia’s invasion of Ukraine.

According to V.R. Sharma, Managing Director, JSPL, international coal prices are up by $100 per tonne in coking coal, while steam coal prices are up by $80 per tonne in a two–to–three week period. Australian coking coal, on which JSPL is dependent, has seen an over 42 per cent jump in approximately one month – from Rs 380 per tonne to Rs 540–550 per tonne at present.

Oil prices have breached the $130 per barrel mark and European gas prices are up 30 per cent because of geo-political concerns. Ocean freight rates are also inching up.

Other input costs like iron and ferro-alloys have also seen a price rise recently. NMDC, the country’s largest iron-ore miner, also announced a price hike effective February 25. It revised lump ore (65.53, 6-40mm) prices to Rs 5,600 per tonne (existing price - Rs 5,200 per tonne), while fines (643 - 10 mm) are priced at Rs 4,560 per tonne (Existing price - Rs 4,260 per tonne).

Energy consumption, without freight charges, account for 53 per cent of JSPL’s operating expenses.

“As of now we have initiated a Rs 5,000 per tonne price hike since March, thereby passing on the entire additional cost of production incurred because of an increase in energy costs. We are covered at the moment and there is no direct impact on our bottom-line. But, energy cost volatility is becoming a nightmare. It’s kind of killing. If the geo-political uncertainties continue, you never know if another price revision can be initiated any time soon,” he told BusinessLine.

Rupee–rouble trade needs to be encouraged, which Sharma feels will lead to India securing crude supplies at a 20-25 per cent discount, thereby, leading to a cool-off against soaring gas and energy prices.

Prices up in Europe

According to him, while steel demand in the Indian market “remains constant”, it’s witnessing a northbound movement in Europe. Prices have been firming up by over 10 per cent in the “spot markets” in the last few days and for exports.

A few days back, ArcelorMittal increased prices of its commodity long steel products in Europe by over euro 100 per tonne.

“Spot export prices to Europe are up. There is a complete stoppage of supplies from Russia. In fact, prices in Europe are better than those in India. For instance, some offerings are priced at $950 per tonne in India, against $1,300 per tonne in Europe. The gap is quite huge. So, it provides us and some other Indian steel makers the opportunity to tap into exports,” he said.

Nearly 35 per cent of JSPL’s total production is directed towards exports.

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