Steel prices to go up by Rs 3,000 a tonne .

Steel prices are set to rise by Rs 2,000 to Rs 3,000 a tonne from April on the back of a spike in input costs.

A few importers have already contracted HR (hot rolled) coil supply for April and May at $800 a tonne. The final price works out to $1,000 a tonne after factoring in other costs such as customs, excise duty, transportation and labour, says a Delhi-based trader.

Taking a cue from imports, domestic HR coil prices may touch about Rs 46,000 a tonne (all-inclusive), against the prevailing Rs 43,500. HR sheet prices will also be revised upwards from Rs 45,000 a tonne, the trader adds.

“In January, the National Mineral development Corporation increased iron ore prices by 15 per cent with another hike expected in April. Coking coal prices are also being revised upwards. With this cost push, we will be left with no option but to raise prices,” says a senior executive of a steel company.

Iron ore from NMDC was priced between Rs 1,900 and Rs 3,000 a tonne depending on the quality of ore, he adds. The demand for ore is set to rise in the coming days as it takes two tonnes to make a tonne of steel.

In past ten days, iron ore prices have risen by almost 20 to 40 per cent, one of the biggest rallies in recent times. The Steel Authority of India, Tata Steel, Essar Steel and JSW Steel have already hiked prices by Rs 1,500 to Rs 2,000 a tonne in the past two months.

“With the rupee strengthening against the dollar in the last few months, one has to see the quantum of cost-push the company can absorb before passing on to end-users,” says an analyst. Nippon Steel Corp and Brazilian miner Vale SA have tentatively agreed to set the price of iron ore at about $105 a tonne for supply in the June quarter, up by about 90 percent from all of fiscal 2009, he points out.

Despite the recent hikes, steel prices are still lower compared to the historic highs in 2008. HR prices were then ruling at Rs 57,000 a tonne while CR coils were at Rs 62,000 in July 2008.

Source : Business Line