Green shoots? Steel companies increase prices first time in nearly six months

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26 Aug, 2025 12:21

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India's two largest steel companies - Tata Steel and JSW Steel - have increased prices of hot rolled coil, the basic steel product, for the first time in nearly six months. These are the earliest signs that the slump in demand and the price may have bottomed out.

Both the steel majors have increased prices in the range of Rs 500 to Rs 750 per ton in early November. A ton of hot-rolled coil now sells for around Rs 35,000, up from about Rs 34,250 in October. In October, the prices were almost at three-year lows.

"We see that the de-stocking process has ended. People are now buying what they need," said TV Narendran, Global CEO and Managing Director, Tata Steel.

"Market has taken the price increase. We will wait till the end of the month," added Narendran, giving indications of taking similar steps in the coming weeks.

"There was a marginal price increase in May. But effectively, this is the first increase in steel prices this financial year," said Jayant Acharya, Director, Commercial & Marketing, JSW Steel.

The price increase is significant as it comes after a prolonged slump in the steel industry as clients in infrastructure and auto sectors - the two biggest clients - have struggled. While big infrastructure projects dried up, car and two-wheeler makers were forced to cut production and lay off employees as customers kept away.

This forced steel companies to shut plants for maintenance even as inventories piled up. Both Tata Steel and JSW Steel saw sales dropping in the first half of 2019, and revenue and profit numbers suffered. If not for a tax write-back, both companies would have suffered steep fall in profits in the second quarter.

Now, the price hike comes along with a drop in inventory levels.

"Both at the mill and market levels, inventories have gone down. In Mumbai itself, the inventory is one-third of what it usually is. Auto companies are showing signs that sales have improved," added Acharya.

Internationally, too, steel prices have picked up a bit also to balance out the relatively high rates of raw materials, such as iron ore and coal that are used in steel making.

Green shoots?

Increase in steel prices may bring some relief after India's industrial output contracted 4.3 percent month-on-month (MoM) in September, according to the Index of Industrial Production (IIP) data released by the government on November 11.

The manufacturing output, which accounts for more than three-fourths of the entire index, contracted 3.9 percent in September. And, mining fell 8.5 percent.

However, companies now are riding on hopes that the slump could have bottomed out after a push from festival buying from October on wards.

Domestic passenger vehicle sales witnessed a marginal increase of 0.28 percent to 2,85,027 units in October from 2,84,223 units in the year-ago period.

This is significant for steel companies, most of whom are now in talks with auto clients for firming up contracts for the next six months. The price of the contracts are decided upon looking at the trends of the past six months.

"We are in talks with our clients. The pricing for the next six months will reflect the recent softness in steel rates. But as we go into the future contracts, the pricing will get better," said Acharya.

Narendran also pointed out that Tata Steel had finalised auto contracts, rates of which were lower than the last one. But, the next contract will start reflecting the increase in steel prices.