Steel companies have hiked prices by ₹5,000-8,000 a tonne across products, including hot and cold rolled coils, TMT bars and wire rods.

Following the hike, prices of hot-rolled coils have hit a record high of ₹65,000 a tonne as steel companies passed on the sharp increase in raw material prices, said a company official. The Russian invasion on Ukraine and the subsequent economic sanction on the former have pushed up input costs, including that of energy prices.

Shivam Bajaj, CEO, Avener Capital, said Russia is one of the largest exporters of steel and the sanctions imposed on it will result in a curtailed supply, globally. Post clarity on the Russia-Ukraine situation, steel prices may cool off to sustainable levels, he added.

Meanwhile, steel demand across the sector remains weak as many of the end users have cut down on their purchases. Dealers are also stocking up cautiously though they do not expect steel prices to crash immediately after the war.

While the economic growth prospects of India may not have a high linkage with the emerging geo-political risks, the sanctions on Russia by many developed nations can disrupt the global commodity markets and supply chain of many key raw materials, putting indirect pressure on the supply side and exerting inflationary pressure across the sector, said SK Gaikward, CEO, Smart Steel Distributors.

It may take up to several months to reinstate the entire supply chain and prices are likely to remain elevated until it stabilises, said a report by Motilal Oswal Financial Services. Costs of sea freights and insurance, too, are likely to shoot up, while disruption in nickel supply could keep both nickel and stainless steel prices in the stratosphere, it added.

Weak demand

Finished steel demand in India slipped 9 per cent month-on-month to 9.2 million tonne in February and the production dropped 4 per cent to 9.5 mt, according to latest steel ministry data. With the weak domestic demand, steel exports increased 42 per cent m-o-m to 1.16 mt, the highest since last September on higher demand from European markets with China going on a week-long Lunar New Year holiday.

Meanwhile, crude steel production by integrated steel producers — Sail, Tata Steel, JSW Steel, JSPL, RINL and AMNS India — during April-February accounted for 62 per cent of output, while their finished steel output accounted for 57 per cent.