Steel cos plan to increase prices as input costs go up

Indian steel companies appear set to increase prices next month as raw material contracts push up costs. According to sources familiar with the development, Tata Steel, SAIL and JSW Steel will hike prices next month. A source in a top steel company, who did not wish to be identified, told TOI: “It is 99% certain that SAIL would revise prices across the board by 10-20% from next month.”

Seshagiri Rao, Jt MD and group CFO, JSW Steel, told TOI that the decision to increase prices will be taken next month. “We are keeping a watch on the international pricing scenario. We will revisit our pricing structure next month.” Earlier, an agency quoted Rao as saying: “Cost pressures are very strong at the moment. Prices are not affordable… in the short-term we have to pass through this cycle.”

There has been a 55% rise in coking coal prices over the last few months. Recently, BHP Billiton, the world’s largest coking coal exporter, won a 55% price increase from Japan-based JFE Holdings steel unit in the first three-month contract ever signed for coking coal. The contract was fixed at $200 a tonne for three months, up from the annual contract of $129. JSW, India’s No. 3 steelmaker, expects to sign coking coal contracts with miners around $200 a tonne, an increase of about 55%, April onwards, but is negotiating for annual contracts instead of quarterly ones, Rao said.

JSW will source 5 million tonnes of coking coal, mainly from Australia, Rao said. JSW, which currently imports all its coking coal requirements, wants to raise its dependence on internal sources of coking coal to 50%. JSW Steel has been on a lookout for mines overseas but has not been able to sign a deal due to limited reserves, Rao added.

SOURCE:http://timesofindia.indiatimes.com/

Jindal Steel MoU soon for coal-to-liquid plant

BHUBANESWAR, India (Reuters) – Jindal Steel and Power Ltd (JSPL) is set to sign a memorandum of understanding with the government in the eastern state of Orissa, paving the way for its plan to set up a coal-to-liquid plant for production of fuel, a senior company official said.

“I think in the next couple of months the MOU should be signed,” Rajesh Jha, executive director of JSPL’s Orissa project, told Reuters on Tuesday.

JSPL is planning an investment of $10 billion, for the project that is expected to be complete in eight years and aims to sell 80,000 barrels of fuel per day (4 million metric tonnes per annum) in the open market, Jha said.

JSPL, a steel and energy producer, produced around 2 million tonnes of finished steel in 2008/09.

A coal block in the state has already been allotted to the company and a few sites are being explored to set up the plant, Jha said.

SOURCE:http://in.reuters.com

SAIL hikes steel prices by upto 600/- per MT.

New Delhi: State-owned steel major SAIL on Wednesday said it has hiked steel prices by up to Rs600 a tonne, effective from 1 March, on account of increase in excise duty.

“Yes there is a price increase of about Rs500 to Rs600 a tonne due to the excise duty hike. The price increase is effective from 1 March,” Steel Authority of India Ltd (SAIL) chairman S K Roongta told reporters on the sidelines of All India Induction Furnace Association meet here.

Roongta said the hike in excise duty will result in steel prices going up.

Partially rolling back the fiscal stimulus in Budget 2010-2011, the government raised excise duty by 2-10% across the board.

To spur economic activities, the government had earlier initiated massive spending programmes and slashed duties from December 2008 in three stages following the global financial crisis that began in September same year.

Steel secretary Atul Chaturvedi also said steel prices were set to go up.

“They (steel prices) will go up now. You have to decipher between inflation and recession. Companies have to earn money and this could be done only if either raw material prices go down or their steel prices go up,” Chaturvedi said.

When asked if the price rise was alarming he said, “If we see steel prices in the last 30 months, the current scenario is not alarming.”

BY: PTI

Steel prices set to rise as coking coal turns dearer

Steel prices are set to rise further with the recent 55 per cent jump in benchmark international coking prices.

In the last two months, steelmakers have hiked prices twice by about Rs 600 a tonne to pass on the incremental production cost to end users.

Japanese steel major JFE Steel had signed a coking coal contract at $200 a tonne for supply between April and June as against $129 a tonne in the same period last year.

Quarterly contracts

“For the first time in last few years, mining companies have pushed in for a quarterly contract pricing, which indicates that the benchmark prices could be reset higher and can have greater linkage with spot market prices,” said a steel company executive.

With the prospect of demand improving in the coming days, steel companies would be able to pass on the incremental cost to consumers, he said. A Delhi-based trader said as such steel prices were already quoted at a premium over the manufacturers’ list price as the market was looking forward to further price rise in the days ahead.

Global mining major BHP Billiton has been persuading steel manufacturers to consider contracts of shorter tenure for both coking coal and iron ore. It has given different price options ranging from quarterly to a combination of annual and quarterly contracts.

Given that global steel demand is expected to improve from the current levels, raw material prices too will be on an upward path. Hence, frequent resetting of prices will favour miners, Ms Chandrani De, research analyst, Ambit Capital.

“On an average, global steel prices need to go up by five per cent to counter the recent higher-than-expected coking coal prices. The expectation of good steel demand will largely ensure that the incremental costs are absorbed through further price rises,” she added.

Local impact

Though Tata Steel in India is more or less self-sufficient in coal, its subsidiary Tata Steel Europe (Corus) may be impacted by the price hike in coking coal.

The cost of production for SAIL would depend on the hike announced by Coal India as the company sources 30 per cent of its requirement domestically. JSW Steel is mostly dependent on imports.

Most of the steel company stocks on the Bombay Stock Exchange ended in the red on Wednesday. While shares of JSW Steel lost two per cent at Rs 1,170, Tata Steel, Bhushan Steel and Jindal Steel and Power were down marginally at Rs 611, Rs 1,723 and Rs 682.

Source:http://www.blonnet.com/

Tata Steel hit by Orissa Govt’s blanket mining ban order

The Orissa Government’s order banning what it feels “illegal” mining by private companies in the State’s iron ore-rich Banspani / Jarauli areas has proved too much for Tata Steel.

The order, also promulgating Sec 144 Cr PC, has stopped iron ore loading at the company’s Joda East mines, with the result iron movement from the mines to the Jamshedpur plant has remained suspended for the past few days. If the present situation continues, the production at the Jamshedpur plant will be hit, according to company sources.

Tata Steel’s Joda East mines on an average load four rakes of iron ore a day, accounting for 40 per cent of the Jamshedpur plant’s daily requirement of 10 rakes. An attempt has been made to step up loading at neighbouring Noamundi mines also belonging to the Tata Steel. But the increased loading at Noamundi, it is felt, will not be enough to cover the shortfall. “After all, it is not a switch-on/switch-off kind of thing,” observe sources.

What is particularly causing concern is the not-so-comfortable iron ore stock at the plant. For about a month now, the South Eastern Railway (SER), for whatever reasons, loaded less iron ore to a rake – 3,600 tonnes on an average against the earlier 4,400 tonnes. As a result, the same number of rakes, though moved into the plant, carried much less quantity.

SER had promised to clear the backlog but the promise, it appears, is unlikely to materialise as SER’s own loading in Banspani /Jarauli areas too has been hit.

“There is nothing illegal about our mining at Joda East, as the mines are our own, siding is our own and we produce entirely for our captive consumption and we’re open to all inspection and verification by any government agency,” says Tata Steel sources.

“But the problem is that those who implement government orders do not differentiate between chalk and cheese”.

Tata Steel, it was informed, had already taken up the matter with the appropriate authorities at every level, both at the Centre and Orissa, but with little success so far.

However, senior officials at the Mines Ministry said they were not aware of the issue and that the Tatas have not approached them as yet.

Meanwhile, the Orissa Government’s order has also hit hard SER, which loads eight to 10 rakes of ore every day at Banspani and Jarauli.

“We’re trying to make up the shortfall by stepping up loading at other locations such as Barbil, Barajamda and a few other places but the present situation, if persists, will affect our throughput,” a spokesman of SER told Business Line.

Iron ore is the single largest item of traffic for SER, accounting for 65 per cent of the total. Till February, SER loaded 70.26 million tonnes of iron ore out of the total traffic of 115.34 mt.

SOURCE:http://www.blonnet.com

steel firms up on excise hike in budget.

Topics: New Delhi JSW Tata Steel SAIL Ispat Industries Essar Steel Atul Chaturvedi
NEW DELHI: Steel prices have increased by 2-3% after hike in central excise duty in the budget. While the net impact of excise duty hike, from 8% to 10%, comes to around Rs 600 per tonne, a few producers have also factored in hike in input cost and raised prices by up to Rs 1,000 per tonne.

With the increase, the benchmark hot rolled coil (the most produced steel item that is used by a cross-section of the industry) prices have firmed up to a level of Rs 34,000-Rs 36,000 per tonne, depending on the grade.

“There is a price increase of about Rs 500 to Rs 600 a tonne due to the excise duty hike. The price increase is effective from March 1,” SAIL chairman S K Roongta said on sidelines of function here.

Private sector steel companies Essar Steel and JSW have also raised prices between Rs 500-800 per tonne. Tata Steel has moderately increased prices of select steel products while sparing galvanised corrugated sheets from any hike to give relief to consumers in the rural market, a spokesperson for the company said.

An Ispat Industries spokesperson said the steel prices have increased as raw material prices have also increased in the past few weeks. “We have increased steel prices between Rs 500 and Rs 1,000 per tonne from this month,” the spokesperson said.

The move has also created ground for increase in prices by user industries or secondary steel producers that source bulk of their products from large integrated primary steel producers. “The hike will definitely impact cold rolled coil producers who will have no option but to pass the increase to consumers,” said an official of cold rolled manufacturers association. Cold rolled coils is primarily used by FMCG companies and automobile sector.

The government, however, feels that the increase in prices will not adversely impact the user industries and not result in higher inflation. “If we see steel prices in the last 30 months, the current scenario is not alarming,” steel secretary Atul Chaturvedi said. “You have to distinguish between inflation and recession. Companies have to earn money and this could be done only if either raw material prices go down or their steel prices go up,” he added.

Steel prices have remained firm in most part of fiscal 2009-10, rising almost 40% from close to Rs 25,000 a tonne at the beginning of the year to nearly Rs 35,000 a tonne now. The prices have moved up between Rs 500 and Rs 1,000 per month in most part of the fiscal, with some price reduction in select product categories in November and December.

4 Mar 2010, 0140 hrs IST, ET Bureau

Steel firms up on excise hike in budget

Steel prices have increased by 2-3% after hike in central excise duty in the budget. While the net impact of excise duty hike, from 8%

to 10%, comes to around Rs 600 per tonne, a few producers have also factored in hike in input cost and raised prices by up to Rs 1,000 per tonne.

With the increase, the benchmark hot rolled coil (the most produced steel item that is used by a cross-section of the industry) prices have firmed up to a level of Rs 34,000-Rs 36,000 per tonne, depending on the grade.

“There is a price increase of about Rs 500 to Rs 600 a tonne due to the excise duty hike. The price increase is effective from March 1,” SAIL chairman S K Roongta said on sidelines of function here.

Private sector steel companies Essar Steel and JSW have also raised prices between Rs 500-800 per tonne. Tata Steel has moderately increased prices of select steel products while sparing galvanised corrugated sheets from any hike to give relief to consumers in the rural market, a spokesperson for the company said.

An Ispat Industries spokesperson said the steel prices have increased as raw material prices have also increased in the past few weeks. “We have increased steel prices between Rs 500 and Rs 1,000 per tonne from this month,” the spokesperson said.

The move has also created ground for increase in prices by user industries or secondary steel producers that source bulk of their products from large integrated primary steel producers. “The hike will definitely impact cold rolled coil producers who will have no option but to pass the increase to consumers,” said an official of cold rolled manufacturers association. Cold rolled coils is primarily used by FMCG companies and automobile sector.

The government, however, feels that the increase in prices will not adversely impact the user industries and not result in higher inflation. “If we see steel prices in the last 30 months, the current scenario is not alarming,” steel secretary Atul Chaturvedi said. “You have to distinguish between inflation and recession. Companies have to earn money and this could be done only if either raw material prices go down or their steel prices go up,” he added.

Steel prices have remained firm in most part of fiscal 2009-10, rising almost 40% from close to Rs 25,000 a tonne at the beginning of the year to nearly Rs 35,000 a tonne now. The prices have moved up between Rs 500 and Rs 1,000 per month in most part of the fiscal, with some price reduction in select product categories in November and December.
SOURCE: www.economictimes.indiatimes.com