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Steel prices set for Rs 1,000 per tonne increase

V Phani Kumar

Domestic steel companies are set to hike prices of galvanised steel by Rs 500-1,000 per tonne from May 1, driven by improving demand from both the domestic and export markets.

This would be the second major increase this fiscal in the prices of galvanised steel, which has already seen a steep hike of around Rs 1,500-2,000 per tonne domestically since March.

According to industry sources, Jindal Iron & Steel Company, Uttam Steel and Ispat Industries are likely to benefit the most from the price hikes.

Already, the capacity at most of the rolling mills for galvanised steel has been completely booked, sources at these companies said.

Raman Madhok, joint managing director and chief executive officer, Jisco, said, "It is very likely that there will be a hike of Rs 500-1,000 per tonne in prices of galvanised steel from May 1. Absorption is easily possible as before the onset of monsoons there will be a strong demand for corrugated sheets for roofing in the rural areas, as well as other areas."

"We expect that the second quarter results to definitely look up this fiscal," he added.

The international prices of galvanised steel have spurted by $70-100 at different times during the past two months due to a strong demand.

Indian manufacturers have a natural advantage in the US market as galvanised steel from India does not come under the ambit of Section 201, which curbs imports of other grades of steel from India.

Indian companies currently has around five million tonne capacity for galvanised steel, with a small surplus. However, industry sources feel there could be a small time lag before there is an additional hike also in hot-rolled coil prices.

"HR coils are an input in galvanised steel manufacturing, hence there will be an indirect increase in demand for HR coils. It could take some time before HR coil prices also see a hike," industry sources said.

HR coil prices have risen by around Rs 500 per tonne since March, after a prolonged slack in demand which resulted in depressed prices.

Even in the export markets, domestic HR coils have been affected by higher import duties in the US and European markets, in addition to higher cost of domestic steel vis-a-vis competition from the Commonwealth of Independent States countries.

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