Steel prices hiked by Rs 5,000 a tonne on global rally, iron ore rises too

The last time steel price rose was in Jan when it touched an all-time high. But it came off those highs as China moved into the new year holiday season on pressure from end users in domestic market


steel production | Iron Ore | steel prices

After a pause, prices of steel and iron ore are on the rise. Steel companies have increased prices by up to Rs 5,000 a tonne beginning April while state-owned iron ore producer, NMDC has hiked prices of lump ore by Rs 500 a tonne.

Steel producers said that prices of hot rolled coil – a benchmark for flat steel (used in automobile, domestic appliances and construction) – have been increased by Rs 4,500-5,000 a tonne; prices of long steel (used in infrastructure and construction) have increased by up to Rs 3,000 a tonne.

Post-increase, the price of HRC is at Rs 57,600; in longs, TMT is at Rs 52,500. The increase in steel prices is led by a surge in global prices.

Ranjan Dhar, chief marketing officer, ArcelorMittal Nippon Steel India (AM/NS India) said, price parity of the world has been changing from last year onwards.

“HRC (hot rolled coil) prices in Europe is inching towards $1,000 a tonne, in West Asia to around $900 and China $870. The difference between average global price and Indian HRC price is about Rs 11,000 a tonne,” he added.

“We are looking at providing support to MSMEs, but overall, it appears that the market has gone through a structural change,” Dhar further said.

The last time the price of steel increased was in January when it touched an all-time high. However, it came off those highs as China moved into the new year holiday season on pressure from end users in the domestic market.

Producers rolled over prices in February and in the early part of March, prices dropped by about a Rs 1,000 a tonne. But sentiments started improving towards the middle of March and prices in the trade segment showed an upward trend.

The trend is across the value chain.

An India Ratings report said, international iron ore prices in mid-March were at $195 a tonne, $8 a tonne lower month-on-month, but still at elevated levels with prices in mid-March 2021 being 81 per cent higher year-on-year.

That played out in the domestic market as well. NMDC had kept prices unchanged from February to beginning March. But effective March 21, prices of lump ore and fines were revised upwards.

Lump ore prices were increased to Rs 5,350 a tonne from Rs 5,100 a tonne and fines from Rs 4,200 a tonne to Rs 4,310 a tonne. Prices were increased again effective April by about Rs 500 in lump ore and Rs 250 a tonne in fines.

Domestic pellet prices, according to the India Ratings report, were at Rs 12,125 a tonne in mid-March, up five per cent month-on-month and 92 per cent year-on-year.

Analysts expect, prices to remain strong in the months ahead on the back of domestic demand and cues from China.

Domestic steel consumption over April 2020-February 2021 at 79.2 million tonnes was down by only 8.8 per cent despite Covid-19, reflecting the improving end-use demand, the India Ratings report mentioned.

Steel prices in the domestic market have been on an uptrend since July last year and that reflected on steel stocks.

The BSE Metal index has gained about 156 per cent in the last one year. On Tuesday, major steel stocks touched fresh 52-week highs during market hours with Tata Steel at Rs 882.30, JSW Steel at Rs 541, Jindal Steel & Power at Rs 397 and Steel Authority of India Ltd at Rs 93.40 on the Bombay Stock Exchange.

Globally, measures in China are expected to lend support to prices. China is looking to reduce its steel output to curb pollution and according to World Steel Association, its crude steel output stood at 83 million tonnes in February, which was lower than 90 million tonnes in January, even though year-on-year it was higher by 10.9 per cent.


Beginning April:

Hot rolled prices increased by Rs 4,500-5,000 a tonne

Long product prices increased by Rs 3,000 a tonne

NMDC increases lump ore prices by Rs 500 a tonne, fines by Rs 250 a tonne

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