Companies & Sectors
Steel prices expected to go up by January on higher raw material costs

There hasn’t been much change in the demand, but increasing raw material costs is putting pressure on steel producers to hike prices

Indian steel makers may go for another price hike as surging raw material--iron ore and coking coal-prices will pressurise steel mills to increase product prices, according to industry experts.

"It looks like prices will go up. Steel prices will move upwards keeping in mind that coking coal prices are being finalised at a higher level for the January-March period and iron ore prices are also moving up. So there will be severe cost pressure on steel mills which will lead to a price hike in January," Sharad Mahendra, vice president, sales and marketing, JSW Steel told Moneylife.

"Some steel makers are planning to increase steel prices by end-December or early January. Though globally steel prices are at an improved level, it's purely because of high raw material prices and there is no significant rise in demand. To protect margins and grab the better demand-supply scenario in the fourth quarter, steel companies are preparing to increase prices," a Mumbai-based analyst said. 

Recently, state-run Steel Authority of India (SAIL) increased prices of long products by Rs300 to Rs37, 500 per tonne, citing good demand for long products as construction activity is likely to pick up in the coming quarter. JSW Steel has raised hot rolled coil prices by 1-1.5%.

According to the analyst, steel prices may increase between Rs1,000 to Rs1,500 per tonne. Mr Mahendra said, "It's difficult to predict the exact hike as coking coal contract prices are in the last stage of finalisation, but in terms of percentage it could be between 3% and 6% per tonne. It's just a guess now."

China is the largest steel producer, so whenever raw material prices go up either they have to shut down units or hike prices, added the analyst.

Now, the Chinese steel industry is coming back on track. Some market experts feel that threat of cheaper Chinese imports into the country may restrain domestic players to go for a large price hike.

However, Mr Mahendra said, "Even though the Chinese steel industry is coming back on track, we do not see it as a threat as the input costs in terms of iron ore and coking coal are very high, so the Chinese mills are not able to export their products at lower prices. Secondly, after capacity shutdowns, which were taken place because of the Chinese government's energy rationalisation policy, Chinese steel demand is forecast to be very good. So I don't think China's increasing steel production will impact the Indian market in the near term."

Supply of coking coal and iron ore would be another concern for steel makers as supply would be less amid higher demand from China and India.

"China's average steel production is 50 million tonnes per month. In September, steel production stood between 46 million tonnes and 47 million tonnes, however, the country managed to produce more than 50 million tonnes of steel in October and for this monthly rate of production the requirement of iron ore and coking coal is huge," said the analyst.

"Weather predictions in Australia, from where majority of coking coal comes, are very bad. It may impact shipments and movement of coking coal from Australia to the rest of country. In India, very few mines are working right now and production of iron ore has come down," added Mr Mahendra.


No clear-cut public opinion on new banking license norms: RBI

Kolkata: Reserve Bank of India (RBI) governor D Subbarao today said the central bank was unable to discern a "clear-cut" public opinion on the proposed norms for issuance of new banking licences, as divergent feedback was received on a discussion paper put up in the public domain, reports PTI.

"We found, not surprisingly, that that there is no clear cut public opinion on new bank licensing issues," Mr Subbarao told reporters after a meeting of the RBI's Central Board here. He said the gist of the feedback would be put up on the RBI website in ten days' time.

The RBI had sought stakeholders' views on issues related to the initial capital of new banks given licences, the way promoters' capital would be diluted, whether corporates should be allowed to set up banks, whether non-banking finance companies (NBFCs) should be converted into banks and the business models for the new entrants.

"Some said that corporates should not be allowed for standard reasons, some said they should be allowed as times have changed," he said.

Similarly, there was a broad spectrum of opinion on the issue of initial capital and dilution of capital, he said.

"There is no clear-cut opinion on each of these issues," he said.

"We will study the feedback we have got and then come up with draft guidelines by the end of January 2011, after further examination of all the issues," Mr Subbarao said.

Mr Subbarao said the Malegam committee constituted by the RBI to examine issues related to microfinance institutions (MFIs) were also discussed by the central board.

He said that YH Malegam, who is also a board member of the RBI, had indicated the report might be submitted ahead of the target deadline of end-January 2011.

As an interim measure, he said the RBI would convene a meeting of banks to understand their concerns about the MFIs.

Mr Subbarao said the RBI would also examine whether anything more needed to be done to keep the struggling MFI industry afloat.

Meanwhile, he said that the Malegam committee is actively working on the report and would be visiting Andhra Pradesh next week, to meet the chief minister and other stakeholders there as well as in other parts of the country.


Protect stakeholders while migrating to digi broadcast: Govt

New Delhi: Claiming that it would be tough to achieve complete migration of broadcast services from analogue to digital system by 2013 as recommended by the Telecom Regulatory Authority of India (TRAI), the government today said the needs of stakeholders must be protected, reports PTI.

“This migration will be a complex exercise. It also requires huge amount of investment from various stakeholders.

All their needs must be protected. Issues like procuring set-top boxes on a huge scale will also have to be considered,” information & broadcasting secretary Raghu Menon said.

He was addressing a seminar ‘Digital visions at addressable India’ organised by the Cable and Satellite Broadcasting Association of Asia (CASBAA).

On the recommendations of TRAI concerning complete digitisation by 2013, he said based on the ministry's interaction with the industry the sunset date of achieving this migration by 2013 seems tough.

“Attempting to achieving this (switch over from analogue to digital) seems tough by 2013 and it should be aligned with the government road map... in which the target is 2017”, Mr Menon said.

He added that national broadcaster Prasar Bharti was on the path of digitising its operations and that the 2013 dateline set for the 1st phase also seemed tough.

“The government is spending Rs152 crore for the 1st phase of digitisation of Prasar Bharti's broadcast services.

However the dateline for this also seems tough to achieve,” Mr Menon said.

Commenting on direct-to-home services, he said it was on a “high growth path” and that it had many miles to go as it had only touched 23 million households of the 230 million TV viewers in the country.

Mr Menon also said that media and TV entertainment industry had witnessed a robust growth despite the global financial meltdown.

“This sector was unaffected by the financial meltdown as it witnessed a growth of 11.8% during this period,” the I&B secretary said.

Mr Menon said the government was keen to take the policy on introduction of mobile TV services forward.

“A committee was formed to look into this issue and give its recommendations. It has done so and we want to take this ahead. Several issues including its spectrum will also have to be looked into,” Mr Menon said.


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)