Steel prices may rise on high input costs & demand, say experts

Cost of raw material, including iron ore and coking coal is expected to go up by 25%-30% in the next financial year from the current level, putting pressure on steel makers to pass on the burden to consumers

Steel prices in India are set to go up on account of rising input costs and demand for the commodity, an industry expert said on Wednesday, reports PTI.

"Cost of raw material, including iron ore and coking coal is expected to go up by 25%-30% in the next financial year from the current level, putting pressure on steel makers to pass on the burden to consumers," Tata Steel's chief of procurement Amitabh Panda told reporters on the sidelines of a conference.

Unlike the West, where steel demand is still recovering from the impact of the economic slowdown, he said, in India, steel producers would be able to pass on the input cost pressure to the consumers as off-takes are steadily growing.

"Indian steel producers have to price their products higher in the next fiscal," Mr Panda added.

He further said that rising raw material costs are of “huge concern” for the bottom-lines of domestic steel firms and the 8%-9% growth in steel consumption would help ease pressure on manufacturers' margins.

Echoing similar views, SAIL general manager for materials management RN Rawat said that coking coal contracted rate for the next fiscal may hover around $200 per tonne from $105 per tonne currently.

"Raw material prices are going up. Even iron ore at present is priced at $100 per tonne. All this will lead to increase in steel prices," Mr Rawat said.

Last week, domestic manufacturers like SAIL and Tata Steel hiked prices of their products by up to over Rs2,000 per tonne, partially passing on the 2% excise duty hike announced in the Union Budget 2010-11 to consumers.
 

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