NEW DELHI -- Indian steel companies are likely to increase prices by 500 rupees ($9.8) to 700 rupees a ton this month-end on expectations of improving demand from the automobile and construction sectors, industry officials said.
Benchmark hot-rolled coil prices range between 33,770 ruppes to 35,182 rupees/metric ton in the local market.
Industry officials said steel prices have stabilized and there is room for "moderate price increases" of about 500 rupees to 700 rupees/ton, an industry official who declined to be identified said Thursday.
"I think there is a stabilization of steel prices," said J. Mehra, chief executive officer of Essar Steel Holdings Ltd. "There is no pressure on prices as of now....We will have to watch whether the demand is rising."
Most auto makers in India reported sales growth in February and March, signaling a recovery in that sector and a potential rise in demand for steel.
"There is a revival in the auto sector, which is one big change; besides, cement sales have improved, which shows construction is picking up," Director M.V.S. Seshagiri Rao of JSW Steel Ltd. said.
Value-added steel maker Uttam Galva Steels Ltd. plans to raise galvanized steel product prices by 500 rupees to 1,000 rupees/ton but has yet to decide on the size and timing of any increase, Ankit Miglani, director of the company told Dow Jones Newswires Wednesday.
Indian steel companies had cut steel prices by about 700 rupees/ton in February, passing on the benefit of tax cuts by the federal government.
Local steel prices are likely to remain firm in April due to some recovery in demand, said Pawan Burde, senior analyst with Mumbai-based Angel Broking.
Steel companies such as state-run Steel Authority of India and Tata Steel Ltd reported a sharp fall in net profit in the quarter ended December 2008, the first decline in three years. The industry expects to report better results in the quarter to March 2009.
"In India, demand is still the bright spot as we have seen good demand for billets, bars and angles," JSW Steel's Mr. Rao said, adding global steel demand is showing signs of recovery as evident in scrap and billet prices.
While industry officials said steel prices have stabilized, analysts said prices may weaken once the coking coal and iron ore contracts for this financial year, which started Wednesday, are fixed.
Indian steel prices could fall by 1,000 rupees to 1,200 rupees/ton by May-June once the raw material contracts are settled," Angel's Pawan Burde said.
Source: http://online.wsj.com/
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