JSW Steel to hike price by 4-6% as coal gets costlier

Following a steep hike in raw material cost, (especially coal)JSW Steel has decided to raise steel price by 4-6 percent from September 1, reports CNBC-TV18. Imported coal price has moved up over 8 percent to USD 136/tonne and since the rupee depreciated around 9 percent during the June quarter, the firm reported forex loss of Rs 850 crore.

Meanwhile, brokerages don’t seem bullish on steel sector, as not only rupee, but weak demand from infrastructure segment will continue to haunt steel makers throughout FY14.

For instance, a recent report by Bank of America Merill Lynch stated that amid bleak economic environment, domestic steel outlook remains weak with lesser possibility of turnaround in the current financial year. The firm also pointed out that many delayed steel projects are likely to be commissioned during the year leading to overcapacity.

Ernst & Young had in its June report said that global steel demand is unlikely to improve significantly in 2013 and sluggish demand combined with factors such as excess steelmaking capacity will challenge the sustainability of high-cost manufacturers.

India Ratings & Research has revised its outlook on Indian steel producers to ‘negative’ from ‘stable’ for H2FY13. “The negative outlook is in view of the higher-than-expected deterioration in the financial and liquidity profiles of rated issuers. The continuous weak macro-economic environment in India has resulted in muted demand for steel products from the end-user industries,” the credit rating agency said.

Steel makers are going through rough whether as is evident from the 13-share metals index falling over 30 percent year-to-date, compared to only 3 percent fall in Sensex.

Read This: JSW Steel's crude steel production rises 47% in July