Rising input costs may force hike in steel prices

Record high raw material prices may force Indian steelmakers to increase steel prices as it becomes difficult for them to maintain spreads, but weak demand in the short term with spiralling imports could be a challenge. Companies had already raised prices of some flat and long products in the beginning of June, in the range of Rs 500 and Rs 750 per tonne in the monthly spot market and are looking at the response before they decide to raise prices further to “enhance the spreads”. Iron ore price has shot up by more than half since the beginning of this year, touching the $110 per tonne mark in June while price of imported coking coal has also remained upward of $200 per tonne. The combined movements of the raw material has put pressure on the spreads. At the same time, a liquidity crunch in the market has affected demand while more than half a million tonne of steel imports are eating into the share of domestic steel every month.