Surge In Raw Material Cost Pushes Steel Prices To New High In April

The surge in raw material prices prompted major steel companies to increase prices in April after two successive months of hikes.

The country’s largest steel producer, JSW Steel, and ArcelorMittal Nippon Steel India (AM/NS India) and Jindal Steel & Power (JSPL), among the top private sector steelmakers, have increased prices of hot rolled coil (HRC) – a benchmark for flat steel – by Rs 4,000-5,000 a tonne.

JSW Steel and JSPL which are into long products have increased rebar prices by Rs 2,250-3,000 a tonne, respectively.

Data from SteelMint shows that the price of HRC after the increase stands at Rs 79,000-79,500 a tonne for JSW Steel and AM/NS India ex-Mumbai. Revised JSW rebar prices are at Rs 73,000-73,500 a tonne ex-Mumbai and JSPL rebar at Rs 76,000-76,500 a tonne ex-Delhi. According to a SteelMint analyst, list prices have surpassed previous highs.

JSW Steel director (commercial & marketing), Jayant Acharya, said that the company had increased prices by 3-5 per cent across long and flat products but it was only partly covering the cost impact.

“The coking coal that we bought in April 2022 will go into April-May production. So May-June are likely to be peak in terms of cost of production,” he explained.

Raw material prices had been on the rise, but since Russia waged war on Ukraine, prices surged.

“Cost push from the raw material side is a concern and we are hoping that it will correct down. It has started correcting to some extent and it is likely to correct further over the next couple of months. That will bring the cost of steel down. But till the time there is an increase of cost in the system, which we will have to see how to navigate, some of the costs will have to be passed on,” Acharya added.

Coking coal prices that had gone up to $670 a tonne have come off its highs in the past few weeks. However, industry sources pointed out prices were still high compared to a year back. Moreover, other raw material prices continued to be at high levels. Also, iron ore, the other key input material, was on an uptrend. NMDC also increased prices in April by up to Rs 200 a tonne.

Steel prices started increasing from February and scaled to record levels. In the last one month, flat steel prices have increased by Rs 10,000 a tonne, said some producers. However, there could be some relief for MSMEs.

“We will continue to support MSMEs through a differential mechanism,” said Acharya.

Ranjan Dhar, chief marketing officer, ArcelorMittal Nippon Steel India (AM/NS India), said, “We have a tie-up with National Small Industries Corporation for delivering products for MSMEs at a preferential price. We are open to strengthening this further basis the need of MSME.”

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