MUMBAI/NEW DELHI (Reuters) - Some steelmakers have raised their prices after a recent government measure to rein in cheap imports, but a surge in value is unlikely as the country’s production capacity is rising faster than its domestic demand growth.
New Delhi last week set a floor price on imports of steel products to bolster the local steel sector, and companies are using the measure as an opportunity to boost domestic sales as cheap imports from China, Russia, Japan and South Korea had squeezed their margins.
JSW Steel (JSTL.NS), one of India’s top steel makers, has upped prices by 3 percent at its retail stores, where it sells products for roofing and construction to consumers.
Tata Steel (TISC.NS) said it has raised the prices of some products by 3-5 percent, while Jindal Steel & Power JSPL.NS has raised prices by 1,500-2,000 Indian rupees ($51) a tonne, or nearly 7 percent, according to a source who declined to be named.
Essar Steel said there was room for a price hike but by how much would be determined only by March. State-run Steel Authority of India (SAIL) (SAIL.NS) did not immediately respond to a request for information about its pricing plans.
“In India, there is stiff competition within the industry itself ... so prices will not go up substantially from current levels,” Seshagiri Rao, the joint managing director of JSW Steel, told Reuters.
India’s steel output will likely grow by 10 million tonnes in the next three to four months, almost 9 percent of the current capacity, against demand growth of 4.2 percent, Rao added.
Analysts agree that India’s increasing capacity, coming largely from JSW, SAIL and Tata Steel, will check any dramatic rise in prices.
Brokerages say steel prices are expected to rise by up to 15 percent over the next six months.
The top steel bureaucrat in the country said earlier this week the government would keep an eye on steel prices and could soon take a decision on extending a 20 percent safeguard duty that expires next month.
India is the only major market in the world where steel demand is growing. The country produced 74.47 million tonnes of crude steel in the 10 months through January 2016, an increase of 0.7 percent, while its consumption over the same period rose 4.2 percent.
($1 = 68.2800 Indian rupees)
Reporting by Promit Mukherjee in MUMBAI and Sankalp Phartiyal in NEW DELHI; Additional reporting by Nidhi Verma in NEW DELHI; Editing By Tom Hogue