| Gateway to boom
Mumbai, Dec. 26: Tata Iron & Steel Company Ltd (Tisco) is planning a price hike of over 7 per cent — Rs 1,000-Rs 1,500 per tonne — from next month.
The revision, likely to be aped by others in the industry, has been blamed on a combination of factors — from rising input costs to stronger demand in the domestic market, especially from builders.
International prices of some key inputs have shot up 7-14 per cent during the last couple of months. At the same time, strong demand from China and other countries have boosted overseas prices of hot-rolled coils. The forecast is that they could soon jump to $360 per tonne from $320 a tonne at present.
Sources say the increase on Tisco’s hot rolled coils will be in the range of Rs 1000-1500 per tonne. Later, the increase is likely to be extended to long products.
The cost of inputs like sponge iron, scrap and coal have gone up during the past few months and, if predictions by industry sources ring true, it will shoot up further.
Sushik K. Maroo vice-president (finance) of Jindal Steel & Power Ltd (JSPL), the largest producer of coal-based sponge iron, said current prices of Rs 9400-10,000 per tonne are up more than 10 per cent over last month. The reason is iron ore, which is costlier by Rs 1500-2000 per tonne.
“Iron ore prices have gone up, there is less scrap available and demand is looking up. Sponge iron prices are usually firm during October-April and we believe that they may go up further,” Maroo added.
To cater to the increase in demand, Jindal Steel and Power is planning to ramp up sponge iron capacity to 1.3 million tonnes from the present 6.5 lakh tonnes.
Industry watchers say though input prices are unusually high, firms are in a position to pass the rise on to consumers because of the sheer strength of demand. “All sectors are doing well and the demand is very good,” said an official from Essar Steel Ltd.
Reports of a price rise sent the Tisco share soaring to Rs 424.50, a gain of Rs 12.65 over the previous finish; it had opened at Rs 413.90. JSPL shares rose Rs 21.15 to close at Rs 549.65 after opening at Rs 529.10. Other shares that sizzled were those of SAIL, Essar Steel and Jindal Vijaynagar Steel Limited.
The proposed hike in January comes after a marginal increase in prices of HRC during November. Reports earlier said that the government had asked these companies to exercise restraint from repeated price hikes. This was, however, denied by Union steel minister B. K. Tripathi.
Sources say the increases planned in January have, once again, swivelled the spotlight on auto companies, who now may have to review vehicle prices. Some have already hinted they would raise prices.