Prices of steel, a key input in many sectors, have continued climbing in the new financial year as well, with most of the country's major steelmakers hiking rates by up to 10 percent.
That may not be all. Leading steel players have indicated that there could be more price hikes in store, especially with domestic rates still at a discount to international levels.
A senior official at JSW Steel confirmed that a leading steel player increased prices by Rs 4,000 a tonne on April 5. This takes the price of a ton of hot rolled coil to Rs 57,000. Industry sources added that Tata Steel and ArcelorMittal Nippon Steel, too, may have hiked prices.
“Apart from the higher international rates, domestic demand has been good and driven by sales of passenger vehicles and better construction activity, which has been fuelled by government projects,” a senior official from the industry said.
Also, even after the latest round of hikes, domestic prices are still about Rs 9,000 a tonne lower compared to the landed import cost of steel from China. “There is room for more increases later on,” added the official.
The latest hike continues a trend that started in June 2020, which saw steel prices rise 45 percent by November 2020. From the beginning of 2021, almost every month has seen a fresh upward push in prices. And the movement has taken place across steel products, including cold rolled coils, TMT bars and wires.
This has helped stocks of steel companies repeatedly hit new highs. On April 1, JSW Steel shares touched a 52-week high. Tata Steel shares also hit their high on the same day. On April 5, it was the turn of the SAIL stock to hit a high.
User industry
The rise in steel prices was one reason for car and bike makers to hike rates of their models from April 1. Maruti Suzuki, Hero MotoCorp, Renault, Nissan, Toyota and Ford are some of the companies that hiked prices.
But that may not yet dampen demand for cars, with many of the manufacturers running at full capacity and the waiting period for some models stretching into months.
The Competition Commission of India had launched a probe in February to check if steel companies have formed a cartel. Union Transport Minister Nitin Gadkari had alleged that steel companies were indulging in cartelisation.
“Every steel company has its own iron ore mines and there has been no increase in labour and power costs but they are increasing rates. It is difficult for me to understand (the reason behind it),” the minister said, and later suggested that a regulator should be appointed for the industry.
Steel companies, however, maintain the price hike is a function of the demand-supply factor.
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