Steel prices to shoot up in 2011
India’s steel companies are mulling a hike in their products from next year.
According to reports, steel companies may hike their product prices by more than Rs 1,500 per tonne from January 1. Reason for this is the recent rise in coal and iron ore costs and also due to the firming up of international steel prices on the back of a recovery in China, the world’s largest metals market.
This is likely to result in a rise in the prices of various goods, including cars and other consumer goods as steel is the main raw material for most products.
Quarterly contract prices of coking coal, primarily used by steel companies, was settled at a 12.5% hike between Japanese steel mills and Australian miners. The contract price range will be in the $221-225 per tonne bracket. This is the price level at which Indian steel companies will buy from overseas coal companies.
While talks between Japanese steel mills and Australian miners on iron ore prices are currently continuing, international analysts have forecast a 7-8 % rise in prices due to a revival in the Chinese steel market.
Coal and iron ore supplies are typically guided by quarterly price contracts, after the industry switched from an annual contract, to represent the volatility in prices after strong demand and tight supplies put pressure on the prices of resources.
However, some reports said China steel industry is likely to resume production, after the official from the National Development and Reform Commission announced that the energy-saving and pollutant-emission cutting targets for the past five years have been realized ahead of time.
The resumption is likely to soften prices of steel and steel products along with Nickel that is used extensively in construction and steel manufacturing.
The production resumption may lower steel price as per some local reports. Most steel mills may resume production around the middle of December and deliver the goods to market near the New Year Days
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