Steel companies like JSW Steel, Essar Steel, Mukand Steel are contemplating to increase prices by around Rs 1,000 to Rs 1,500 per tonne from January to mitigate the impact of increase in input costs on its margins.
January-March usually the peak period for steel companies is not showing signs of strong revival in the domestic market. However, globally demand for steel is improving in countries like China, US and Europe and prices globally are also showing an upward trend. Demand in October-December quarter did not increase as per expectations as a result the steel companies could marginally increase prices in the quarter. Experts said it is essential for steel companies to increase prices in January-March to retain profits.
A senior official from JSW Steel said, “We are planning to increase prices of flat products by around Rs 1,000 to 1,500 per tonne in the month of January. Prices in December remained flat. While iron ore and freight costs have gone up it is important for us to take some price increase to sustain margins.”
The official said that demand for steel continues to be low in the domestic market but since globally the prices have increased because of which landed cost of steel has gone up it would help the Indian steel companies to increase prices.
A senior official from Essar Steel also said that the company is planning to increase prices by around Rs 1,000 to Rs 1,500 per tonne.
Steel Authority of India is yet to decide on the price hike.
However, few companies who are also contemplating price hike are skeptical whether the hike is sustainable given the low demand in the country.
“It is true that our margins are under pressure and we want to increase prices but demand continues to be really low in the domestic market due to significant slowdown in auto and real estate sector. We are also planning to increase prices but are yet to decide on the quantum,” said Suketu Shah, joint managing director at Mukand Steel.
Similarly R K Goyal of Kalyani Steel also said that the company plans to increase prices but is not sure whether it is sustainable.
Analysts said that price increase is essential for steel companies to maintain their profits. In October-December steel companies are likely to report subdued results from a year ago as price increase taken by the companies were not sufficient.
Bhavesh Chauhan, an analyst at Angel Broking said, “October-December results are likely to be a subdued quarter for the steel companies as demand didn’t revive as per expectations and prices went up marginally.”
Since the landed price of steel has gone up there is scope for steel companies in the domestic market to increase prices, said Chauhan.
Sanjay Jain, an analyst at Motilal Oswal also said that steel demand in the domestic market continues to be low. However, price increase is essential to sustain profits of the steel companies.
January-March usually the peak period for steel companies is not showing signs of strong revival in the domestic market. However, globally demand for steel is improving in countries like China, US and Europe and prices globally are also showing an upward trend. Demand in October-December quarter did not increase as per expectations as a result the steel companies could marginally increase prices in the quarter. Experts said it is essential for steel companies to increase prices in January-March to retain profits.
A senior official from JSW Steel said, “We are planning to increase prices of flat products by around Rs 1,000 to 1,500 per tonne in the month of January. Prices in December remained flat. While iron ore and freight costs have gone up it is important for us to take some price increase to sustain margins.”
The official said that demand for steel continues to be low in the domestic market but since globally the prices have increased because of which landed cost of steel has gone up it would help the Indian steel companies to increase prices.
A senior official from Essar Steel also said that the company is planning to increase prices by around Rs 1,000 to Rs 1,500 per tonne.
Steel Authority of India is yet to decide on the price hike.
However, few companies who are also contemplating price hike are skeptical whether the hike is sustainable given the low demand in the country.
“It is true that our margins are under pressure and we want to increase prices but demand continues to be really low in the domestic market due to significant slowdown in auto and real estate sector. We are also planning to increase prices but are yet to decide on the quantum,” said Suketu Shah, joint managing director at Mukand Steel.
Similarly R K Goyal of Kalyani Steel also said that the company plans to increase prices but is not sure whether it is sustainable.
Analysts said that price increase is essential for steel companies to maintain their profits. In October-December steel companies are likely to report subdued results from a year ago as price increase taken by the companies were not sufficient.
Bhavesh Chauhan, an analyst at Angel Broking said, “October-December results are likely to be a subdued quarter for the steel companies as demand didn’t revive as per expectations and prices went up marginally.”
Since the landed price of steel has gone up there is scope for steel companies in the domestic market to increase prices, said Chauhan.
Sanjay Jain, an analyst at Motilal Oswal also said that steel demand in the domestic market continues to be low. However, price increase is essential to sustain profits of the steel companies.
