Calcutta, Jan. 1: Steel manufacturers are set to hike prices by Rs 1,000-1,500 per tonne from this month to offset the rising input costs and freight charges.
End users of steel are, however, disappointed with the price rise and believe that it will act as a deterrent to growth in an already slow market.
JSW Steel had announced a hike of Rs 1,000 per tonne last month, and industry sources believe that almost all steel makers will follow.
Jindal Steel and Power Limited (JSPL) has increased the price of its products by Rs 1,000 per tonne with effect from today.
Other producers such as SAIL, Tata Steel, Essar Steel and RINL are likely to follow to remain competitive.
Following the hike, the price of hot rolled coil, the benchmark steel product will shoot up to Rs 39,500 a tonne from Rs 37,500 per tonne earlier.
Steel makers had previously hiked the price in September by up to Rs 2,500 per tonne, but had deferred another hike even as NMDC raised iron ore price by Rs 100 a tonne and the railways imposed a peak session charge from October.
Barring Tata Steel and SAIL, domestic steel makers mainly source their iron ore requirements from NMDC. An additional hike of Rs 200 a tonne in December by the PSU has impacted them. It generally takes 1.6 tonnes of iron ore to produce a tonne of steel.
Subdued market conditions — a result of poor demand from end-use segments such as construction and white goods — also prevented producers from raising prices. India’s steel demand grew just 0.4 per cent during the April-November period of the current fiscal.
Costs went up further by around Rs 200 per tonne with the railways imposing an annual busy season charge on freights from October.
“At the beginning of every quarter, the steel manufacturers negotiate prices with the consumers. It is disappointing that they are looking to increase prices at the beginning of this quarter. They charge a higher contract price and then offer a rebate. But even then the prices will effectively rise and burden the end users,” an industry observer said.