Steel companies are set to increase prices from September due to rising costs and higher international prices,

Jayant Acharya, director – marketing, commercial & corporate strategy at JSW Steel, said, the difference between domestic and international prices currently is about 8 per cent. “An increase in prices from September is on the cards. The amount will be decided, he added.

Acharya explained that iron ore prices were at a 6-year high. “International steel prices in August, too, have increased," he said.

The average FoB China for hot rolled coil (HRC) in April 2019 was $532 a tonne. At the beginning of August 2020, it was at $495 a tonne and currently is at Rs $515, indicating an increase of nearly $20 a tonne. However, the current price is yet to breach last year's April-level.

The increase from September could be in the range of Rs 2,000-3,000 a tonne. While a major primary steel producer said that an increase of Rs 3,000 a tonne in steel prices was being contemplated, a secondary steel producer, said that the increase could be Rs 2,000 a tonne. In the second quarter, so far, steel prices have increased by about Rs 3,000 a tonne.

Acharya said that demand was improving across the world and average sales in August were at par with pre-Covid-19 levels. However, prices were still not back to pre-Covid-19 levels of March.

JSW Steel said on Thursday that it had started the roll-out of JSW Radiance, a steel colour-coated product range in high-gloss feature with multiple variants. It was suitable for applications ranging from warehousing, appliances, cold storage, hospitals etc.

Acharya said that incrementally, demand was picking up in the domestic market across sectors.

"While demand was picking up in the domestic market, export markets were buoyant," the secondary steel producer said.

Data from Joint Plant Committee (JPC) shows that exports of semi-finished steel in the first four months of FY21 crossed total volumes of semi-finished steel exports in FY20. Finished steel exports during April-July were more than 50 per cent of total volumes of finished steel exports last year.

As countries across the world started coming out of lockdowns, demand saw an improvement.

According to World Steel Association’s July data, world crude steel production for the 64 countries reporting to it, was 152.7 million tonnes (mt) in July 2020, a 2.5 per cent decrease compared to July 2019.

However, the recovery was mostly led by China, which produced 93.4 mt of crude steel in July 2020, an increase of 9.1 per cent compared to July 2019. Japan produced 6.0 mt of crude steel in July 2020, down 27.9 per cent, South Korea’s steel production was 5.5 mt, down by 8.3 per cent.

Production in the EU, overall, is estimated to be 9.8 mt of crude steel in July 2020, down 24.4 per cent year-on-year. While the US produced 5.2 mt of crude steel in July 2020, a decrease of 29.4 per cent compared to July 2019, in the CIS, production is estimated to be 8.1 mt in July 2020, down 5.8 per cent.

In India, capacity utilisation levels are increasing month-on-month. ICRA said earlier this month that the steel industry’s capacity utilisation levels had steadily inched higher from the lows of 27 per cent in April 2020 to 67 per cent in July 2020, but were still lower than last year’s average of 77 per cent.

Major primary steel producers were, however, operating at 85 to 95 per cent.