Steel prices in India have been at an all-time high over the last few months following supply shortages in Australian coking coal | Photo Credit: onlyyouqj
Steel prices — primarily that of rebars, hot-rolled coils and cold-rolled coils – are set for a hike this month pushing the costs of automobiles and construction upwards.
While rebars and hot-rolled coils are expected to see around Rs. 3,000 per tonne price hike (up 2-2.5 per cent), the prices of flat products are up Rs. 5,000 per tonne. Steel-mills have asked for Rs. 10,000–11,000 per tonne price hike from automakers during contract negotiations.
Contracts are mostly going to be “for a three-month period” considering the volatility in steel prices, a senior official of an Indian steel-major said. In a month, the flat product prices are reportedly up by Rs. 10,000 a tonne.
Previously, these would be six-month contracts. Last price revision for automobile steel contracts were in October 2021.
While hot-rolled coils (HRC) is quoting in the range of Rs. 76,000-80,000 per tonne, rebar price stands at Rs. 75,000-76,000 and cold-rolled coils is Rs. 85,000-86,000. Steel prices in India have been at an all-time high over the last few months following supply shortages in Australian coking coal. Floods in Australian mines have hit supplies with prices varying between $600 per tonne and $700 per tonne in March. Other input costs like iron ore, coal, refractories, graphite electrodes, and energy costs have also surged.
A shortage in European markets due to the ongoing Russia-Ukraine war has also impacted steel prices. Spot prices in Europe are $200 more than those of India, indicating price pressures.
Car makers hike prices
AutomobileOEMs such as Maruti, Tata, Toyota and Hero are likely to hike prices April onwards.
Tata Motors has already announced that the prices of its commercial vehicles will be increased in the range of 2-2.5 per cent, depending upon individual model and variant. The new prices will come into effect from Friday.
“The increase in the prices of commodities such as steel, aluminium and other precious metals, in addition to higher costs of other raw materials, has incited this price hike,” the company said. Similarly, Hero MotoCorp said it will make an upward price revision (by up to Rs. 2,000) in the ex-showroom price of its motorcycles and scooters, effective April 5.
According to VR Sharma, MD of Jindal Steel and Power Ltd (JSPL), the MSME contracts will also be reviewed and re-negotiated.
The Steel Ministry had earlier asked Indian steel mills to offer discounts to MSMEs. Accordingly, around Rs. 2000–3000 per tonne as discount was offered to small scale industries .
“There will be some discount being offered to MSMEs based on the volumes they order,” spokesperson of a steel-major said.