JSW increases steel prices by Rs 500 a tonne

JSW Steel, India’s biggest private sector steel producer, has decided to increase steel rates yet again.

This time the quantum of increase has been kept between Rs 500 and Rs 750 per tonne for both flat and long products and will be effective from March 1. This is in contrast to the first two hikes of Rs 1,500 per tonne in January and Rs 1,250 per tonne in February. Other companies too are expected to follow suit once JSW increases the price.

“If we see the April-May 2012 rates, the price of flat steel today is at that level but the price of long steel is still less by Rs 3,500 per tonne. However, in this period, the input costs have gone up and there is a scope to increase the prices,” said JSW Steel marketing and commercial director Jayant Acharya.

He said in spite of increase in prices by almost Rs 3,000 per tonne since January, India is still lagging its peers in the international market by almost $200 per tonne, which also justifies a hike in the price. The import equivalent of Europe’s hot rolled coil is at $625 per tonne and the United States is over $700 per tonne. In China, the important equivalent stands at around $570 per tonne.

However, analysts term it as a “market testing” tactic of JSW as the year is coming to a close and all steel companies would like to achieve their targets. “Considering current demand scenario in India and the emerging trends of a downward correction in international steel prices, any price hike in India will not be sustainable,” said an analyst with a domestic brokerage.

He said JSW would “test the waters” to see if a price hike is possible as internationally prices are still high compared with the domestic market, although they are expected to come down slowly.

“Steel mills are optimistic of another round of price increases in March 2014, though we are not sure if such increases will be accepted by the markets. We expect softening in domestic steel prices in the course of next three months,” said analysts with domestic