Steel companies have hiked hot rolled coil prices by ₹4,000 a tonne to ₹67,000 in May due to sharp increase in cost of production, amid the second wave of Covid-19 pandemic ravaging the economic activity.
Similarly, cold rolled product prices was marked up by ₹4,500 a tonne to ₹80,000 even as demand which revived sharply plateaued in the last two months due to various restrictions imposed by State governments to control the pandemic.
Despite the hike, steel prices in India are at a discount of ₹8,000 a tonne to the landed cost of imports. Steel export from China are prices at $967 a tonne (free on board) while in Europe, it is $1,161 a tonne and in US, it is $1,410 a tonne.
Steel companies may go for another price hike of ₹2,000-4,000 a tonne by mid-May or early June, sources said. Many of steel using industries have decried sharp hike in domestic steel prices impacting infrastructure projects.
In fact, the Competition Commission of India has launched investigation to probe whether the steel companies are forming cartel to hike price. Though realisations in domestic are higher than exports, the steel companies ramp up exports when demand in the domestic markets plunge.
Other cost pressure
Apart from coking coal and iron ore prices, the freight cost are also going up for steel companies. Many iron ore and coking coal mines in Australia and Brazil have shut production due to the pandemic.
This has impacted the supply across the globe. China has started tapping in other countries for importing coking coal and iron ore after restricting imports from Australia. The move has pushed up prices shipped in from other countries. Moreover, China has shut down small pollutant steel plants as part of decarbonisation, cutting down steel supply and pushing up prices.