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Steel prices to head north

New Delhi, March 10: A rising demand and an increase in the prices of raw materials are expected to make steel costlier, said industry officials.

“Cost of raw material, including iron ore and coking coal, is expected to go up 25-30 per cent in the next financial year from the current level putting pressure on steel makers to pass on the burden to consumers,” said Amitabh Panda, chief of procurement, Tata Steel.

He was speaking on the sidelines of a conference here.

Unlike in the West, where demand is still soft, Indian producers can leverage the rising demand for the commodity to pass on the input price hike to customers.

“Indian steel producers have to price their products higher in the next fiscal,” Panda said.

Coking coal rate for the next fiscal may move up to $200 per tonne from the current level of $105 per tonne, according to R.N Rawat, general manager (materials management) of SAIL.

Last week, domestic manufacturers such as Steel Authority of India Limited (SAIL) and Tata Steel hiked prices by as much as Rs 2,000 per tonne, partially passing on the 2 per cent excise duty hike announced in the budget to consumers.

SAIL capacity

SAIL today said it would increase its annual production capacity in a phased manner to 26 million tonnes (mt) by 2014.

“At present, the company produces about 13.82mt of hot metal every year. In the first phase of expansion, by the end of 2012, it will be increased to 23.46mt and in the second phase it will go up further to 26.18 mt,” said Rawat.

The second phase of the expansion programme is likely to cost the steel maker about Rs 10,000 crore.

At present, SAIL is undertaking a Rs 70,000-crore expansion programme to raise its capacity to the 23mt level in another two years.

Earlier, the plan was to raise capacity to 26mt by two years.

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