Domestic steel industry, which has been holding the priceline
for over two months, may be compelled to raise rates in August owing to
increasing raw material costs.
"There is a good possibility of prices to increase in August, but I
cannot confirm that right now because there is still 12-15 days before
August comes," JSW Steel's vice chairman and managing director Sajjan
Jindal told reporters on the sidelines of a function on Saturday
evening where he was felicited by the Haryanvi Mumbaikars on being the
president of industry body Assocham.
Steel producers had rolled back prices of flat products by Rs 4,000 a
tonne and Rs 2,000 per tonne for structural steel last May and promised
to hold prices for three months, ending in the first week of August, to
help government rein in runaway inflation. However, far from cooling
off, inflation galloped to 11.91% as per the latest available data
mainly because of the sky rocketing crude oil prices.
At the same time price of raw materials, mainly coal and iron ore, have
shot up by around 10% in the last three to four months. Domestic steel
prices are 15,000 to Rs 20,000 lower than international prices now,
according to steel makers.
Tata Steel managing director B Muthuraman had last week said "there is
every justification to increase steel prices" since the industry cannot
go for capacity expansion at the current profit margins. "The rise in
input cost could be absorbed for some time, but it persists many
projects will be unviable. The growth of the industry will hamper. If
the industry does not make money then they will not be having surpluses
to reinvest and the projects will slow down," Jindal said.
India currently produces around 59 million tonnes of steel a year. The
government estimates it to go up to 124 million tones in the current
plan period ending 2012. "While the growth of the global steel industry
was at 5.8% during the last three months, Indian steel industry only
observed 1.8% growth during the same period," he said. AGENCIES
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