Private steel maker JSW Steel has decided to raise prices
by 1% to 2% from February 1, 2014. The
price increase, prompted mainly by steep domestic ore prices, is expected to be
anywhere between Rs. 700 and Rs. 1,200 per tonne.
Other steel producers without access to captive mines are
also likely to follow suit. The price hike is expected to be more pronounced on
value-added grades of steel like cold-rolled, galvanised and colour coated
materials that go into making consumer durables.
Domestic steel demand has improved in January over the
October- December 2013 quarter, with increased construction activities in
tier-2 and tier-3 cities.
Auto component makers, medium and small enterprises and
export-led manufacturing have also contributed to the demand growth. We are
being forced to raise prices after taking a hit of about Rs. 900- Rs.1000 per
tonne on the cost of production in December 2013, said Jayant Acharya, JSW Steels director of
commercial & marketing.
Other factors that have prompted the price hike include
rupee depreciation and the gap between international and domestic prices. Benchmark
global prices of hot-rolled coils are hovering between $ 575 and $ 580 per
tonne.
Stocks of dumps are getting exhausted while mines are yet
to start production after the mining ban was lifted in Karnataka. This has
created an abnormal shortage of iron ore in domestic market.
Against a production limit of of 2.5 million tonnes (mt)
in Karnataka, only around 1.6 mt is coming to the market, leading to an
abnormal price increase.
The uncertainty over the Shah Commission report on Odisha
has also added to the problem. We did not anticipate this kind of a price
increase in iron ore in December. We have not been able to raise prices since
September,though domestic price is at below parity with global steel prices,
Mr. Acharya added.
Price increase is mainly prompted by steep domestic ore
prices Prices are expected to be anywhere between Rs. 700 & Rs. 1,200 per
tonne Benchmark global prices of hot-rolled coils are between $ 575 and $ 580
per tonne
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