The Rising Price of Steel and Rod

The prices of Cold Rolled Coil steel (CRC) and Hot Rolled Coil steel (HRC) have been hiked by up to Rs.4000 and Rs.4900 per tonne, respectively. 

The exuberant rise in the price of steel and rod has also resulted in several leading automakers such as Maruti Suzuki, Hero MotoCorp, and Nissan hiking their price to tackle higher costs of flat steel.

According to leading analysts, though, the price hike will result in better earnings for the steelmakers for the succeeding financial year.

The Reason Behind the Rise:-

The current JSW tmt steel price stands at Rs.54000/ton. Although the hike in price is visible, economists have gone through an analysis to figure out the reason for this hike. Some of them are discussed below:-

⮚ Raw-Material Shortage:

One of the primary causes is the unprecedented rise in the price of iron ore. The world is facing a major depletion of non-renewable sources. Iron ore is to be found in a limited quantity on the earth's surface, but the population is surging at an unimaginable rate. Hence, the price of iron ore and the planet's population are currently in a directly proportional relation. 

⮚ Demand from Foreign Market:

Global markets are emerging after a year-long slumber due to the pandemic. As business activities are getting resumed and vaccination drives are being held, there is a strong demand for steel by foreign markets.

⮚ Competition from the Market:

Most of the equipment for vaccination is made of steel. As almost all developed countries are hyped to complete the vaccination of the majority of the population, it has resulted in an unprecedented hike for steel. This, in turn, has raised the price of steel.

The Impact:

The hike in price has certainly led to an impact on other industries in the country. The current JSW rod price (12mm) is Rs.22000-Rs.25000 per dia. Some of these impacts are discussed below:

● Among the worst-hit sectors due to the hike in price was the automobile and infrastructure sector. As both these industries are dependent on steel to carry out their functions, the rise of price in steel has also increased the price of automobiles.

● On the positive side, the steel industry, which had witnessed huge downfalls due to the pandemic, seemed to find some footing. It brings a huge sigh of relief to the steel companies that are domestic and grappled with stagnant prices and low demand.

The Indian Steel Association, in its letter addressed to the PMO highlighted the various international and domestic causes which have led to the rise in price. The association also pointed out that the Indian steel industry fixes the price of its products almost at par with international levels.

JSW Steel and JSW MSME, both hope that, as said by Union Minister Ram Prasad Singh, the price of steel is expected to come down once production increases.