Steel may cost 5% more from this week

Increase In Key Input Cost, Huge Chinese Demand Pushing Up Price

 STEEL prices are set to go up by about 5% later this week due to higher raw material costs, making it the second price hike in two months in the world's fastest-growing steel market after China. This is likely to increase the price of cars and consumer goods, which are among the largest users of steel.
    Steel companies, including JSW, Tata Steel, SAIL, RINL and a host of medium and small producers, could be raising product prices anywhere between 1,000 and 1,500 per tonne, depending on specific grades, a senior executive in a large steel company said. SAIL and JSW Steel had increased product prices in December by an average of 500 per tonne.
    Last month, contract prices of two key steelmaking inputs rose sharply — coal prices went up to $240 per tonne, while that of iron ore is up at $150 a tonne. They were at $230 and $130 per tonne respectively. "With input costs going up sharply, the possibility of a moderate price increase is very much on the cards," said the executive mentioned earlier. "We should be able to take a call on the extent of price hike in a day or two," he added, asking not to be named as price hikes are market sensitive.
    The price hike will be applicable on flat steel products, like hot rolled and cold rolled steel items, which are used in consumer durables and cars. Auto makers like Tata Motors, for instance, have already announced price hike on commercial vehicles.
    This could lead other makers of passenger cars like Maruti, General Motors and Hyundai Motor to follow suit. The rise in raw material prices is also likely to push up prices of long products of steel, which are typically used in construction and infrastructure projects like roads, bridges and airports.
    Raw material prices have become dearer due to a number of factors. While domestic demand is strong, increased purchases by China, the largest steel producer, has pushed up prices.
    According to the European Confederation of Iron & Steel Industries outlook for 2010-11, steel market in Europe is also expected to sustain signs of a recovery in consumption in 2011.
STEEL FRAME
This is the second price hike in two months in the world's fastest-growing steel market after China
Cars and consumer good are set to cost more as these are among the largest users of steel
Last month, the contract prices of two key steelmaking inputs — coal and iron ore — rose sharply
Increased purchases by China, the largest steel producer, has been the main reason for the price rises
Tata Steel in talks to extend
tie-up with Canadian firm
TATA Steel is in talks with Canada's New Millennium Capital to extend an existing agreement to develop iron ore mines in Canada. Its current agreement with New Millennium expired on December 31, 2010. The Jamshedpur-based steelmaker also plans to ink an agreement with Japan-based Nippon Steel by this
month end to set up a 2,400-crore steel plant for producing auto-grade steel. Tata Steel owns 27.3% of New Millennium, which controls the emerging Millennium Iron Range in the province of Newfoundland and Labrador and in the province of Quebec, that holds the world's largest undeveloped magnetic iron ore deposits. Tata Steel also has an exclusive right to negotiate and settle a proposed transaction on the LabMag and KeMag projects. The Millennium Iron Range currently includes LabMag with 3.5 billion tonnes of proven and probable iron ore reserves. New Millennium's direct shipping ore project contains 64.1 million tonnes of proven reserves The company's proposed 50:50 JV facility with Nippon is expected to commence operation by early 2013 at the Tata Steel's unit in Jamshedpur. The facility's initial capacity would be 0.6 million tonnes (MT) per year. It aims to capture the growing demand for high-tensile auto-grade steel in India, Tata Steel managing director HM Nerurkar said. Nippon will transfer its technology for producing auto-grade steel. —Our Bureau & Agencies