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Mumbai: 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
"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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