Steel prices likely to rise by 5.7% in FY13: CMIE

On the back of healthy demand, rise in input costs and hike in excise duty, steel prices are likely to go up by 5.7% this fiscal, according to economic think tank CMIE.

"We expect steel companies to undertake further round of price hikes in the coming months of 2012-13 on the back on healthy demand, rise in input costs and hike in excise duty," Centre for Monitoring Indian Economy (CMIE) said in its monthly report here.

However, the upside in prices will be capped by weakness in international market, it said.

"We expect steel prices to rise by 5.7% in 2012-13," it added.

Earlier in April, faced by rising cost of production, most steel companies had raised prices in the range of Rs 750-1,500 per tonne on the back of provisional change in prices indicated by state-run iron ore producer, NMDC and the freight hike by Indian Railways.

NMDC increased the iron ore prices by 10% on rising demand for the raw material used in making steel.

It further said, steel production, which is under pressure due to ban in iron ore mining in key states, is likely to grow by about 10.4% this fiscal due to growth in demand.

"We expect the growth in steel production to pick up

in 2012-13, irrespective of the status of iron ore mining activity in banned areas," CMIE said.

Companies, which previously procured iron ore from the banned mines, will meet their requirements from other iron ore producing states, it pointed out.

There is ban imposed on iron-ore mining in key producing states of Goa, Karnataka and Odisha.

Besides, a hike in export duty to 30% from an earlier 20% is likely to increase domestic iron ore supplies, it said.

The demand for steel is also expected to grow at a brisk pace with the construction and automobiles sectors likely to grow at a healthy pace, it added.

The industry is scheduled to commission 15 million tonnes per annum (MTPA) of finished steel manufacturing capacity in 2012-13, it said.

"This is likely to aid the 10.4% growth in steel production in this fiscal," it opined.