New Delhi, Jan 28: Steel companies are ratcheting up prices again — the second time within a month.
The prices of most steel products, including hot rolled coils, are set to rise from the start of next month.
The fresh price hike is expected to shore up bottomlines of an industry that has been wracked by shrinking demand after the meltdown of the economy soon after the East Asian crisis walloped the world.
The price hike of about Rs 500-1000 a tonne was decided by steel manufacturers association — the Indian Steel Alliance —comprising SAIL, Tata Steel, Essar, Jindal and Vijaynagar. Last month prices went up by about Rs 500 a tonne.
Better demand spurred by a huge road construction project undertaken by the government and private housing projects besides exports have resulted in an upsurge in the steel market.
However, buyers of steel coil under the banner of Federation of Industries, formerly called Federation of Engineering Industries of India, have shot off a complaint to the government, stating “ since April last year hot rolled coil prices have gone up by nearly 50 per cent.”
In March last year, flat steel manufacturers were selling HR coils at a price of Rs 11,500 a tonne which has gone up to Rs 17,500 a tonne now, the federation has pointed out. The steel users who are mostly processing flats for consumer products point out that the market for them has remained sluggish.
Steel shares, which were in the dumps, have surged on the bourses because of the price rise. SAIL prices which were trading at an average of Rs 6 or so in November traded at an average of over Rs 10 this month.
SAIL fares well
Bouyed by better price realisation, state run giant Steel Authority of India today reported a cash profit of Rs 215 crore for the third quarter ending December 31, 2002 as against a cash loss of Rs 297 crore in the same period previous year.
Said SAIL chairman V. S. Jain, “This has given us confidence that we will turn the corner soon.”
SAIL’s losses were slashed at Rs 79 crore in the third quarter of the current fiscal, an improvement of Rs 507 crore over the corresponding period last year, a press note issued by the company said. The steel behemoth witnessed a jump of 28 per cent in turnover at Rs 4,908 crore.
The company showed a recovery of 57 per cent with its nine-month (April-December) loss being brought down to Rs 558 crore. It also registered a growth of 21 per cent in turnover at Rs 13,097 crore in the first nine months of the current financial year.
Improvement in market conditions and company’s own product mix helped mild steel volumes to grow by around nine per cent as well as push net sales realisation by 15 per cent during April-December, SAIL officials said.
The steel major’s exports grew sharply by more that 120 per cent in the third quarter.
SAIL has also been successful in reducing its borrowing level by Rs 371 crore over March 2002 as also reducing its capital-related expenses by Rs 168 crore during April-December 2002 through reduction in interest charges. A renewed cost reduction drive led to savings of around Rs 250 crore during the first nine months of the current financial year.