companies have increased prices for the third consecutive by Rs 2,000-2,700 a tonne in October on the back of buoyant demand and spike in raw material cost.
The ongoing geo-political uncertainty has pushed up cost on imported key raw materials including coking and thermal coal, ferro-alloys besides the rise in shipping cost, said senior steel company official.
This apart, the jump in domestic fuel and power cost has also led to cost push, he added.
Hot Rolled Coil prices are up to ₹64,700 per tonne against ₹62,000 logged in September, according to data sourced from BigMint, an online market intelligence platform.
Despite broader macroeconomic inflation concerns, domestic steel demand remains resilient, supported by government-led infrastructure spending and urban real estate activity.
India continues to outpace major global markets with steel consumption projected to grow by nearly 7.9 per cent.
While price-sensitive retail segments may face short-term volume deferrals, institutional and infrastructure-heavy demand shows little sign of slowing down significantly.
Bhavik Bhagwanji Shah, Analyst (Metals & Mining), Choice Institutional Equities said the steady rise in steel prices was driven by surging global coking coal costs, iron ore supply tightness and firming energy expenses.
On the domestic front, post-monsoon restocking and steady industrial consumption are providing manufacturers the pricing power to pass on these elevated input costs, he said.
With key inputs such as coking coal and iron ore prices expected to remain firm or trend higher in the near term due to supply-side bottlenecks and geopolitical logistics pressures. As long as input costs remain elevated, steel mills will maintain defensive pricing floors, making sharp downward corrections unlikely through the remainder of the year.
Antu Eapen Thomas, Senior Research Analyst, Geojit Investments said besides raw material rise, supply side constrains due to maintenance shutdowns at some mills have tightened near-term availability, while imports have become less competitive due to the safeguard duty and rupee weakness.
Domestic steel producers have implemented multiple price increases since September, taking hot-rolled coil prices well above last year’s levels, said Thomas.
Higher inflation and rising interest rates could slow demand in sectors like housing and automobiles. This may slowdown pace of price hikes in near future, though demand should stay healthy,
Rajesh Singla, CEO and Fund Manager, Alpha AMC said the latest price hike looks like the tail end of a cost-push cycle that has been building since August. Prices have already climbed by roughly ₹4,000 a tonne to a four-year high, with hot-rolled coil hovering about ₹64,000 a tonne. Two things are driving this.
Nearly 40 per cent of premium coking coal imported from Australia was priced much higher than last year’s level and this has forced steel mills to pass on the cost, he added.