Steel-makers such as SAIL and JSW Steel have hiked prices in a sluggish market to offset the rising input costs.
The country's largest steel-maker SAIL has increased prices of both long and flat products by up to four per cent with effect from October 15, officials said.
JSW Steel officials said the hike is up to Rs 750 per tonne for the October-December quarter. However, officials at Tata Steel said the company has not increased any prices.
Sluggish demand
Analysts, however, are wary about steel-makers' latest attempt to pass on the costs to consumers considering a sluggish demand for the commodity. For the first half of current fiscal, steel consumption grew by a mere 1.8 per cent according to latest estimates by Steel Ministry.
“It is not surprising that steel vendors are trying to increase their prices. Whether they will be able to sustain that we will have to wait and see,” said an analyst with a Mumbai-based brokerage.
Soaring costs
Since early this year, steel-makers have been reeling under the impact of high input costs such as coking coal and iron ore. SAIL, which saw its fiscal 2011 profits shaved by Rs 3,015 crore due to high coking coal prices, has increased its product rates for the first time in 10 months.
However, JSW Steel has been attempting to pass on the cost hike to customers, the last revision being in July when the company increased its products by Rs 1,000 per tonne. Steel-makers expect demand to pick-up post October, when they typically revise their prices.
Coking coal
The prices of coking coal continue to rule high at over $285 per tonne, whereas iron ore prices are up by Rs 1,500 per tonne in the aftermath of the ban on mining in Bellary.
Bulk consumers of flat steel products like APL Apollo Tubes Ltd plan to pass on this price hike to their end-consumers. APL Apollo buys over 25,000 tonnes of cold rolled steel a month from SAIL and JSW Steel to make pipes and tubes used in construction and automotive segment.
“Steel prices have gone up by around 11 per cent in past two months. JSW has increased prices by Rs 2,250 per tonne, while SAIL's prices have gone up by around Rs 1,500. We plan to pass on this hike to end-consumers,” said Mr Pankaj K. Gupta, GM Finance & Accounts at APL Apollo.