Steel prices are set to go up by ₹1,000 a tonne with companies getting ready for another hike in price in line with the global trend and firming iron ore prices.
In fact, steel companies have hiked hot-rolled coil prices twice since the start of this month by ₹750 and ₹1,000 a tonne, taking advantage of rising prices globally.
NMDC on Monday announced plans to hike iron ore prices by ₹400 a tonne with immediate effect. Following this, steel companies may rise prices further by about ₹1,000 a tonne in March as the domestic prices are currently at a discountto the landed cost of imports, said a source.
Incidentally, the series of steel price hikes come after it remained subdued for the last three months due to weak demand from automobile and white-goods sectors.
The previous hike had come in October and ever since companies have accumulated inventory putting pressure on their balance sheet, he added.
The price hike comes as a big relief for large steel producers such as JSW Steel and Tata Steel that had managed to sell less than what they produced in the December quarter.
Tata Steel produced 3.34 million tonnes (mt) in the third quarter and sold only 2.97 mt. Similarly, JSW Steel produced 4.23 mt but sold 3.68 mt. But with the domestic steel demand still languishing, it is to seen whether the price hike can be sustained.
Iron ore price
NMDC, the largest iron ore supplier, had raised lump iron ore prices by 15 per cent to ₹3,000 a tonne and fines by 17 per cent to ₹2,760 a tonne.
Earlier this month, Odisha miners also increased ore prices by ₹250-300 a tonne following the global trend. Despite the hike, iron ore prices are trading at 15 per cent discount to the international prices and there is enough room for further uptrend in prices of domestic iron ore supplies.
Iron ore has remained supercharged since late January after the dam burst in Brazil shaved off 30 million tonnes of supply from Vale SA, one of the largest iron ore producers. Earlier this month, iron ore prices surged globally to five-year high on concern of another production cut of 30 million tonnes by Vale.