Steel producers likely to hike prices by upto Rs1,500/tonne

Domestic steel producers are expected to take advantage of the hike in Safeguard Duty and increase prices by up to Rs 1,500 per tonne. Earlier this month, the government imposed a provisional Safeguard Duty of 20 percent on import of certain hot rolled flat steel products with a view to protect domestic producers from the recent surge in inward shipments from countries like China. It will be applicable for 200 days, during which the inquiry on whether to continue the duty, will be completed by the Directorate General of Safeguards.

Industry insiders say steel demand is expected to pick up in the second half of this fiscal, beginning next month, as there are signs of revival in government spending on public projects. Besides, industrial activity is also expected to pick up during the October-December quarter and the steel sector expects sales to increase during the period. These factors coupled with a depreciating rupee against the dollar provides a good opportunity to the steel producers to raise prices, which can help them marginally by increasing their realisations.

Post the duty hike on HR coils there is a price gap in the imported and domestic steel. Major producers are supplying steel at around Rs 27,500 per tonne, while the landed price is in the range of Rs 30,000-30,500 a tonne, they said. "There is a gap of Rs 2,500-3,000 per tonne.

But China is very bearish and can further reduce prices," they added. Even with Chinese price revision on the horizon, experts expect major Indian steel producers to raise prices anywhere in the range of Rs 500 to Rs 1,500 a tonne, keeping in mind the gap in prices. The price raise is expected in coming month.