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Indian steel producers consider raising prices in May

Indian steel producers are considering raising prices by Rs 1,500-2,000 a ton for May, to cover a part of the sudden spike in the cost of inputs.

After the imposition in February of a minimum import price (MIP) to protect them from cheaper imports, producers had raised prices by 4%. According to trade sources, raw materials have since continued to move up. Since mills had cut prices over the past two years to match cheaper imports, they are not in a position to absorb the rising input prices. 

The basic raw material, iron ore, is costlier by 53% over the past four months. The benchmark 62% iron content for delivery in North China is quoted at $64 a ton, as against $42 a ton on January 1.

The price of hard coking coal has risen by 12% to $91 a ton and met coke by 20% to $135 a ton.

Most of these input prices have surged after the government imposed the MIP on 173 steel products on February 5, to curb shipments from China, Russia, Japan and South Korea.

Even with current levels, manufacturers say they are seeing a strain on pricing and margins, especially for small scale units, and this warrants a further increase in prices by 8-15%.

“We will have to keep observing the movement in raw materials and the international prices of steel and then take a call. In general, prices have gone up.  In China, prices have risen even more than $100 a ton. The volatility in both raw materials and steel prices in the past few days has been very sharp. We will take a view in the next few days,” said an industry source.

Responding to the government’s MIP, benchmark hot rolled coil (HRC) prices in Indian markets rose 12% to Rs 35,000 a ton.

Similar growth was seen in cold rolled coils, to Rs 47,500 a ton. Since January, all varieties of steel products have become costlier by 12-20%.