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.