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Steel producers to hike prices

By Ishita Ayan Dutt in Kolkata
June 04, 2009 11:02 IST
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Taking a cue from the trend of price rises in global steel market, domestic producers are likely to hike prices from July.

Jatinder Mehra, chief executive officer, Essar Steel said, "I believe, in July, there will be some push in the market. In the Indian market, revival has already begun. Auto, fabrication, capital goods and white goods are doing very well."

In the flat products segment, hot rolled coil prices have not seen a hike since September last year. Last month, long product, cold rolled and galvanised prices were raised.

Sajjan Jindal, vice chairman and managing director, JSW Steel, Wednesday hinted at a price increase in July. Jayant Acharya, director (sales and marketing), JSW Steel said the company was yet to take a call on the zinc-based products for this month. Zinc prices had increased, he pointed out.

Domestic steel prices are presently higher than the international prices. While global HRC prices were at $360-$380 a tonne, domestic prices are at $450 a tonne.

Globally, the market was on an uptrend. The first signs of a recovery in the global steel market were visible with the South African unit of the world's largest steelmaker, ArcelorMittal, and US-based A K Steel announcing price hikes from July.

ArcelorMittal South Africa has announced a 5-6 per cent increase in flat steel prices, used mostly by the auto and consumer durables sector, and a 5-6 per cent increase in long steel, used by the construction sector. The move from the steel major is the first since September 2008 and reflects the recent global trends.

US-based AK Steel would be increasing sheet prices by $20 a tonne from July 1, an initiative which would lift sentiments among other steel mills in the country where hot rolled coil prices are presently hovering about $360-$380 a tonne, down from peak levels of $1,100 a tonne last year.

The price hikes appear to be stemming from the production cut initiated across the world. In South East Asia HRC export prices are higher by $20-$30 a tonne. The increase is not across products and is more selective. For instance, in northern Europe, prices have moved up $85 a tonne in the last six weeks.

Acharya said price lows were over and there was an appreciation of $30-$40 in the international market. With coal prices crystallizing, the market was now better positioned to gauge the cost structure.

However, the main concern for domestic producers is the cheap imports. Rashtriya Ispat Nigam Ltd, after increasing prices last month, decided to rollback this month. Sources said imports of 31,000 tonnes of wire rods would be delivered at Mumbai port during May-July.

Acharya said India was becoming a dumping ground and the cost of landed imports was injurious to the industry.

The industry's request for a safeguard duty was still pending. The Standing Board on Safeguards, which met on May 11, had asked the Directorate General of Safeguards to examine the issue further and seek views of the parties concerned, including consumers.

In April, the DGS had recommended a 25 per cent safeguard duty on imported HRC below $600 a tonne to protect the industry from cheap imports, following an application made by Essar Steel, Ispat Industries, supported by JSW Steel and state-owned Steel Authority of India Ltd.

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Ishita Ayan Dutt in Kolkata
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