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Steel prices head north

Calcutta, June 3: The best is yet to come for steel companies in India and abroad. Steel prices are set to make new records this year, breaking all previous highs. The international rate is now hovering around $600 a tonne, which is just trailing the historical peak of $625 reached in mid-2004.

World Steel Dynamics (WDS), the leading steel information service in the world, predicts that world export prices ' the prices at various ports across the world on f..b basis from tier 1 mills ' could rise by another $75-100 a tonne to $675 tonnes in next two months.

WSD, in its latest report, indicated that prices would touch $675-700 a tonne in June-July before slipping again to $550-575 in the third quarter.

However, prices are likely to rally again by the year-end, it added. The demand-supply situation would be good for the non-Chinese steelworks in 2007 as well. Compared to this, the average prices in the January were hovering around $400-420 a tonne.

The strong sentiment is also being reflected in the domestic front where steel mills have raised prices in four consecutive months.

“The Chinese demand is strong and the momentum in the domestic market is good. Indications are that prices will firm up in coming months,” a steel industry executive said.

After a hike in prices by steel majors this month, benckmark hot-rolled coil prices rose to Rs 26,500 a tonne, which is close to the all-time high price level of 2004.

In 2004, prices had touched Rs 28,000-29,000 a tonne. However, prices later nosedived and went down to Rs 19,000 a tonne level. The sentiment firmed up early this year.

Steel majors say that rising input cost is one of the reasons for firm prices. For example, global iron ore prices are set to rise 19 per cent this year.

Global mining giants like Brazil’s CVRD and Anglo-Australian BHP Billiton and Rio Tinto, who control majority of iron export, have been locked in bitter negotiations for this years’ benchmark price but it is likely that 19 per cent raise will come through.

Tata Steel on Thursday raised HR prices marginally between Rs 500 and Rs 1,000 a tonne in the spot market.

JSW Steel raised prices between Rs 1,000 and Rs 1,250 a tonne, Essar Steel by Rs 1,000-1,200 a tonne and Ispat Industries by Rs 1,000 a tonne.

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