New Delhi3 hours ago
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The ever-increasing steel prices have increased the manufacturing cost of four and two-wheelers. Companies like Maruti, Hero, Renault are again increasing the prices of their vehicles in July. In such a situation, some big steel makers have agreed to increase prices by 10-16 percent after long talks with automobile manufacturers.
Some steel making mills have finalized this agreement. At the same time, some expect a deal by the end of this month. This deal is for the April to June quarter. According to steel industry sources, steel accounts for around 8-9 per cent of the sale price of a car.
The prices of flat steel used in car body, non-exposed car chassis and safety components have been increased by Rs 7,500-9,800 per tonne. At the same time, the price of steel used in engine, transmission and steering, seating wire applications has been increased by Rs 6,000 per tonne.
These companies finalized the deal
Ranjan Dhar, Chief Marketing Officer, ArcelorMittal Nippon Steel India (AM/NS India) said that we have finalized some deals and the rest will be completed by the end of the month. The increase in CRCA, or cold-rolled close-annealed (based on index momentum) for Q1FY will be around Rs 10,000 per tonne.
JSW Steel Director (Commercial & Marketing), Jayant Acharya informed that the auto contracts for the April-June quarter have been finalised. Tata Steel is working towards closing the contracts by the end of the month.
Prices will rise further
Steel industry sources said the gap between domestic prices and quarterly auto contract is around 18-25 per cent after one tonne increase in various products. One of the manufacturers said the starting price was Rs 57,000 to Rs 58,000 per tonne for CRCA and Rs 54,000 to Rs 55,000 per tonne for auto grade hot rolled (HR).
With the April-June deal finalized, the companies are likely to start talks for the second quarter. There are indications that it may increase further. “We will also finalize the contracts for the second quarter soon based on the movement of the index during April to June, which should be around Rs 20,000 per tonne,” Dhar said.
Steel prices have been rising globally for the past one year. Domestic flat steel prices almost doubled to Rs 72,000 per tonne in June 2021 from Rs 38,000 per tonne in June 2020. Long steel prices rose 1.4 times to Rs 57,900 per tonne, according to a Crisil report.
However, domestic steel prices were still at a discount to international prices. Most of the jump in domestic steel prices happened after November, which prompted a shift in auto contracts from six-monthly to quarterly pricing. Last time the increase from January to March was around Rs 7,000 per tonne.
Dhar said, “While auto contracts have shifted from semester to quarter from January 2021, we have always been inclined to keep auto contracts on a semester basis only. We hope to return to it from the second half of this financial year. “