Steel prices are set to increase by about ₹2,000 a tonne next month on the back of strong demand and a rise in raw material prices. This would be the fourth consecutive month that steel prices have increased.

Early this month, steel companies had raised prices by ₹1,750, on the back of good demand from dealers and the steel consuming industries.

Steel prices, which have already gone up by ₹2,000 a tonne in the last two months, are firming up on the back of strong global trend. Domestic demand in China, the global price setter, has been holding up and pushing up key raw materials prices, such as as iron ore and coking coal. More importantly, China's exports have fallen substantially, as most of its production has been consumed domestically. Global prices have also firmed up in the absence of dumping by China.

Price recovery crucial

Ranjan Dhar, Chief Marketing Officer, ArcelorMittal Nippon Steel India, the joint venture company which recently took over the stressed Essar Steel, said the steel industry was hit hard by the demand slowdown over the last six months, which had resulted in a steep drop in prices. The price recovery was, therefore, important for the long-term sustenance of the industry, he said.

Steel prices have risen by over $100 a tonne (₹7,100) to $535 ($420) a tonne in the last two months, and Indian steel companies have enough head-room to increase prices, the CEO of a steel company said.

Large iron ore miners have marked up prices, with the state-owned NMDC hiking prices of iron ore by ₹200 a tonne in January.

In fact, iron ore prices rose by 14 per cent to $106 1 tonnes last month, against $96 logged in November. Similarly, coking coal prices increased 10 per cent to $145 a tonne, against $134 recorded in November.

With Indian merchant miners bidding aggressively in the recent Odisha mining auction and amid sustained demand, iron ore prices are set to rule firm in the coming days, said a steel company official.

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