Mittal predicts 21% jump in steel prices

ArcelorMittal’s CEO forecasts a drastic increase in prices for benchmark hot-rolled coil

Lakshmi Mittal, chief executive officer of ArcelorMittal, the world's biggest steelmaker, has stoked a row over how global prices are set by telling consumers that raw material costs may push steel rates up by 21%.

"The cost of producing steel is going to go up and will be passed on to customers," Mr Mittal said in an interview, reports PTI.

Benchmark European hot-rolled coil prices will rise by $150 a metric tonne in the second quarter, he said. Steelmakers are passing on costs after Vale SA, the largest iron-ore producer, scrapped a four-decade system of annual price-setting and boosted prices for Japanese steelmakers as much as 90%.

Carmakers, the biggest users of steel, are crying foul.

The European Automobile Manufacturers' Association, which represents companies, including Volkswagen AG, PSA Peugeot Citroen and Fiat SpA, said that members want EU regulators to “tackle distortive developments” caused by the changes from mining companies.

“The necessity to increase prices is generating the ire of customers and a bitter battle is raging,” said Christian Georges, an analyst at Olivetree Securities who has tracked industry and resources for 15 years.

Mr Mittal's forecast for benchmark hot-rolled coil would mark a 21% jump from levels now of about $700 a tonne, based on Metal Bulletin data. The coiled steel is used by firms from Toyota Motor Corp, the world’s biggest carmaker, to Royal Philips Electronics NV, the largest lighting company.

Eurofer, a group representing steelmakers in Europe, accused the biggest iron ore suppliers of “illicit coordination of prices” and said it had notified the regulatory arm of the European Commission about possible anti-competitive practices. It said that a shift to shorter contracts for iron ore at higher rates may boost costs for their customers by as much as a third.

“Steel producers will have to pass these rises on to the consumers,” Eurofer director-general Gordon Moffat said in a phone interview. “It's going to create a great deal more volatility in prices.”

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    A breakthrough in public service?

    At last, a public service campaign has come along that seems to be working

    Public service advertising in India is essentially a big sham. It’s almost always executed with one mission in mind: to grab yet another (worthless) advertising award. Until only a few years ago, fake, non-existent ‘clients’ used to be invented for a public service ad.

    Jamadaars, cobblers, cooks, dhobis… they all became fair game! It’s only in the recent times that juries have taken a tough stand on fake ads. Still, if you glance through the December issues of low-cost dailies such as ‘The Free Press Journal’ and ‘The Afternoon Dispatch & Courier’, you’ll find they resemble guard books for the nation’s finest pieces of advertising. Needless to add, all scam ads get created at the last minute to add to the awards’ tally.
    However, now and then comes along a public service ad that appears serious in its endeavour, and holds a degree of promise. Breakthrough Trust, an international human rights organisation, has released one such campaign in India. Themed ‘Bell Bajao’, the ads attempt to solve the problem of domestic violence. There are three commercials on air. In each one, when a neighbour hears conversations and sounds that indicate domestic violence, he/she rings the cad’s doorbell as an excuse to intervene. But instead of taking the offender to task (clearly not a good idea… can be hazardous to the bell-ringer’s health!); the neighbour makes an excuse to strike a conversation. In one commercial, an old man hands over a blank postcard. In another one, the fellow wants to know what the time is. In the third commercial, the neighbour enquires if the electricity is working in the offender’s house.

     Quite obviously, these feeble attempts cannot stop the menace of domestic violence. This is like using Band Aid to heal a brain tumour. But what ‘Bell Bajao’ does is two things: One, to make the offender aware that the neighbour knows about his misdeeds, so he better be careful. This can often work. Many people fear being ostracised by neighbours. And two, the intervention can provide some breathing space to the victim, even save her life, although temporarily. The unsaid thing, of course, is that if the violence does not end, one always has the option to call the cops.
    It’s a good idea. Any public menace that can be dealt with by civilians must always be encouraged. However, for now, three commercials are done. The true test of the campaign will come in the future. If they don’t go all the way, and use a sustained 360-degree carpet-bombing exercise in the media, then the entire venture becomes pointless. This idea must become a movement for it to hope to achieve some success.
    And only when that happens, can we safely assume that this isn’t just another campaign created with Cannes or Goafest in mind.

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    Auto makers end fiscal on upbeat note

    The stimulus package, low rates of finance, new model launches and aggressive marketing by various players have been critical drivers of growth in the last fiscal

    The country's major automakers like Maruti Suzuki, Hyundai and Hero Honda, have reported robust monthly sales in March, despite price hikes following increase in excise duty, helping 2009-10 end on a strong note, reports PTI.

    Continuing with the push that it had got from the stimulus packages, low interest rates and new model launches, car sales carried forward growth momentum in March that the industry had witnessed in the whole of the fiscal 2009-10.

    According to industry players, consumers' attempt to beat another round of possible price hikes due new emission norms effective from April also helped boost sales.

    Led by market leader Maruti Suzuki, carmakers have also registered healthy jumps for the fiscal.

    Maruti Suzuki India crossed the 10-lakh sales mark in a single year, the first by any Indian carmaker.

    Commenting on the good growth, Ernst & Young national leader (Automotive Sector) Rakesh Batra told PTI, “We have seen the growth momentum continue in March 2010 and can estimate the passenger vehicle industry to end the fiscal with a healthy growth of over 25%.”

    The stimulus package, low rates of finance, new model launches and aggressive marketing by various players have been "critical drivers" of the growth in the last fiscal, he added.

    “The increase in sales for the month of March can also be attributed to the hike in prices that have come into effect from 1 April 2010, because of increase in input costs, the implementation of BS-IV and the increase in local road tax and local sales tax,” Toyota Kirloskar Motors deputy managing director (Marketing) Sandeep Singh said.

    In March, Maruti Suzuki reported an 11.04% jump in its total sales at 95,123 units against 85,669 units during the same month last year.

    Rival Hyundai Motor's total sales grew by 19.23% to 55,035 units against 46,159 units in the year-ago period. Its domestic sales are at 31,501 units, the highest ever so far.

    Automaker Mahindra & Mahindra witnessed an increase of 16.30% in domestic sales for March at 29,944 units.{break}

    General Motors India saw its highest-ever monthly sales in March at 11,330 units, a two-fold jump compared to the year-ago period, on the back of a strong showing by its small cars ‘Beat’ and ‘Spark’.

    Ford India reported a three-fold jump in its sales at 9,478 units on the back of its newly-launched hatchback ‘Figo’ getting a good response. Toyota Kirloskar Motors reported 90.01% jump in sales at 6,905 units during March.

    However, Honda Siel Cars India reported a 19.54% fall in its sales during March at 5,928 units. .

    In the two-wheeler segment, market leader Hero Honda saw a 17.35% increase in sales at 4,14,638 units last month, the best-ever reported by the company for March. While Chennai-based TVS Motor Company's sales increased 24.35% to 1,46,736 units, Honda Motorcycle & Scooter India reported 76.25% jump in its total sales at 1,44,288 units in March.

    India Yamaha Motor reported a 27.30% growth in its sales at 27,460 units. Likewise, Suzuki Motorcycle India also witnessed a jump of 76.13% in its sales in March at 21,752 units.

    For the entire 2009-10 fiscal, Maruti Suzuki reported a rise of 28.55% in its annual sales at 10,18,365 units, as against 7,92,167 units during the previous fiscal.

    Hyundai Motor India registered 20.79% jump in its total sales at 6,00,588 units as against 4,97,206 units.

    Domestic sales of Mahindra & Mahindra in FY'10 stood at 2,86,713 units as against 2,20,215 units, up 30.20%. Toyota Kirloskar posted 36% rise for the entire fiscal at 63,837 units.

    Honda Siel Cars registered an increase of 17.92% in its annual sales at 61,815 units as against 52,420 units in FY'09.

    In the two-wheeler segment, Hero Honda registered sales of 46,00,130 units during 2009-10, up 23.59%. It had set a target of 40 lakh units for the fiscal. TVS Motor also reported a rise of 14.80% in its total two-wheeler sales at 15,21,912 units. India Yamaha also reported a jump of 44.38% in its annual sales at 2,90,211 units.

    Honda Motorcycle & Scooter India reported an 18.7% growth in its total sales for the 2009-10 fiscal at 12.70 lakh units, on the back of new product launches. "(The) outlook for FY'11 is strong, though growth may be in the 15%-20% range. With the steep increase in commodity prices, manufacturers will be under pressure for profitability, which will be the key focus in FY'11,” Mr Batra said.

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