Steel Companies to Hike Prices! Will It Impact market Demand?

Indian steel companies are planning to increase the prices of various steel grades due to rising import costs of coking coal, notably from major producer Australia. Industry insiders suggest that steel mills may raise rates by $25 to $50 per metric ton by December. This price surge is attributed to Australian coking coal prices soaring by 50% to over $350 per metric ton, caused by factors like maintenance outages, lower supplies from Queensland, and disruptions in the train network.

Australia supplies more than half of India’s coking coal imports, totaling around 55-60 million metric tons annually. India also imports coking coal from Russia and the United States, with some steel mills considering turning to Russia in larger quantities due to discounts.

The substantial increase in imported coking coal prices is expected to add at least $50 per ton to the final steel product’s cost, impacting the margins of steel companies. Steel Authority of India (SAIL), the country’s largest state-owned steel producer, has already reported margin hits due to higher coking coal prices.

Despite this challenge, steel companies are compelled to raise prices, especially with growing demand in India’s construction and infrastructure sectors after the monsoon season subsides in September and early October. Some steel companies have already initiated price increases for hot-rolled and cold-rolled products by approximately $12 to $24 per metric ton. These price hikes are happening during a time when demand typically surges in October and November, coinciding with Indian festivals.