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Steel prices are set to go up by ₹6,000 a tonne in January with the sharp increase in coking coal price and other operational costs.
Incidentally, the global steel prices are also set to increase, leaving enough room for domestic steel producers to hike prices despite weak demand.
In December, steel companies such as JSW Steel, Tata Steel, Essar Steel and SAIL hiked prices by ₹3,000 a tonne to ₹36,000-₹38,000.
In fact, steel prices are on rising trend since July on hopes that the good monsoon will revive rural demand and better spending power in the hands of government employees with payment of the Seventh Pay Commission arrears. The hike in prices comes when the steel demand, particularly in construction and infrastructure sectors, have taken a hit following demonetisation of high value currency by the government.
Rupee impactThe sharp rupee depreciation has pushed up the cost of imported coking coal for companies such as JSW Steel, Tata Steel and Essar Steel necessitating a hike in prices.
The current price difference between domestic and imported steel is about ₹6,000 a tonne after the sudden depreciation of rupee.
Justifying the hike, a steel company official said demand has slumped only for long products used in real estate and construction projects and that too at the retail end which accounts for just 10 per cent steel produced. “Though not very robust, the steel demand is steady from original equipment manufacturers, automobile makers and white goods sector. In fact, people are already seeing some signs of revival from the impact of demonetisation. The rupee depreciation has also opened up opportunities in export market," he said.
Exports, imports upThe sign of revival in economy was visible with India’s exports registering a growth for the third straight month in November.
Exports were up 2.29 per cent to $20 billion in November aided by 14 per cent increase in engineering product exports.
Imports rose 10.44 per cent to $33 billion, largely due to 23 per cent jump in gold to $4.36 billion.
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