Steel companies hike prices for sixth time in a row

Suresh P Iyengar Mumbai | Updated on February 26, 2020

With imports hit by coronavirus outbreak, domestic makers see increased demand

Contrary to the expectation of a fall in metal prices due to the coronavirus impact, steel companies have hiked hot-rolled coil prices for the sixth consecutive time, by ₹500-750 a tonne, to ₹39,200. The price hike will come into effect on March 1.

The coronavirus scare has completely shut cheap steel imports from China, Japan and Korea. Robust orders from infrastructure projects have boosted domestic demand. Moreover, some of the steel end-users are willing to pay any price to build sustainable inventory with domestic supply, as the uncertainty over imports is likely to remain for long.

Jayant Acharya, Director (Commercial and Marketing), JSW Steel, said that despite the present hike, steel prices in India are at discount to the landed cost of imports, and 8 per cent lower against March 2019 prices.

Moreover, he said, iron ore prices globally have firmed up to $90 a tonne while coking coal has moved up to $160 a tonne from $130 due to supply distribution.

Wary of imports

In fact, pre-ordered steel shipments from abroad have already arrived and people are scared to place future orders due to the possibility of coronavirus contamination, Acharya added.

Steel prices in India fell freely last year. From ₹48,000 a tonne they fell to ₹34,000 last September, before moving up from October on the back of the economic stimulus given by the government to infrastructure and various other sectors. Prices were hiked twice in January to narrow the gap between lower domestic and import prices.

Even while steel companies were raising prices on buoyant domestic demand, cheap imports slowed down the pace of hike. In fact, some of the domestic importers are now willing to adopt the cash-and-carry model for local supplies, said a senior steel company executive.

Huge inventory in China

On the other hand, China has piled up a huge inventory as its demand from the infrastructure, automobile and white-goods sectors have come to a halt and export prospects have diminished, Acharya added.

The fall in exports from China has opened up India’s export opportunity, especially to some of the South-East Asian countries, he said. Racing to meet the March-end deadline, some of the infrastructure projects in India have placed huge orders even while demand from the auto and white-goods sectors are showing signs of revival, he added.

In the auto sector, commercial vehicle demand still remains weak and may soon pick up as economic activity strengthens, he said.

On the possibility of coking coal imports from Australia by steel companies being hit by the virus attack, Acharya said: “Supplies are coming in as of now but we are keeping a close watch on it and the only concern is on ferro alloy supplies.”

Published on February 26, 2020

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