Anticipating pressure from the government, steel companies decided not to hike prices on Sunday, but are likely to raise them over the next few days in varying degrees.
Industry sources said the companies would raise prices over the next week and the band could be Rs 1,000-2,000 per tonne, depending on the extent to which they could absorb the cost push.
The price revision was supposed to have happened on Sunday but the companies refrained from it, as they felt an indirect pressure from the government side. However, it would happen over the next few days and the reasons are three-fold. Sources said, some of the companies could even increase prices tomorrow.
The cost of landed imports is higher than domestic prices by Rs 2,500-3,000 per tonne. From April, the industry will face an increase of Rs 2,000-2,500 per tonne in input costs. Also, an industry representative pointed out, even if the companies did not raise prices, traders would not pass on the benefit to consumers since international prices were high. "It will lead to black marketing," the analyst said.
Though there has been no official communication from the government side to the companies or the other way round, the industry is under pressure.
Industry Secretary Ajay Dua had earlier said that the government was yet to hear from the steel comapneis officially on price increase but would appeal to steel producers to hold the hike.
It is likely that if the PSUs -- Steel Authority of India and Rashtriya Ispat Nigam Ltd -- increase the prices, they would keep them to the bare minimum. "It will depend on the effect of the cost push hike for them," said a source.
Global iron ore benchmark contract prices being settled with an increase of about 10 per cent for the year 2007, Indian iron ore producers have also decided to follow international trends to effect a similar price hike from April 2007.
This will have an impact of about Rs 400 per tonne of steel produced with Indian lump ore priced at around Rs 2,400 per tonne ex-mines.
Moreover, prices of scrap and sponge iron, two other major inputs for steel making, have also increased by $10 to $15 per tonne, resulting in an impact of Rs 700 per tonne.
Scrap prices are prevailing at an all time high of $400 per tonne in India while low ash metallurgical coke prices imported from China has also seen a $10 to $15 increase in the last one month to a landed price of $240 per tonne for April deliveries.