Prices Are Again Looking up Showing Signals of a Better 2013.

Business Standard reported that amidst all the gloom surrounding the Indian steel sector, prices are again looking up showing signals of a better 2013.

Some steelmakers have started to give out feelers to the market that steel prices will go up in the coming months. A dealer based in Mumbai said that prices for flat steel have already started moving up. RINL increased rates by INR 500 per tonne this month when it followed most of the bigger steelmakers who had raised prices by up to INR 1500 a tonne.

Although the move has been initiated to protect profit margins as raw material prices have gone up in the same range, it is a positive sign as earlier companies did not have the confidence to increase prices.

Steel demand growth in the current year has been low at 5% to 6% as against industry expectations of 8% to 10%. This is anticipated to have made companies cautious in their approach towards pricing.

An analyst tracking the sector said that “There has been a demand push off-late and this has helped steelmakers in raising prices.” He said that there has been a good 5% to 7% price hike in both flat and long steel products on an YoY basis.

Mr Prasad Baji and Navin Sahadeo of Edelweiss Research in a report dated December 4th said that there are signals of the end of slowdown in the metals sector. They also indicated that lead indicators have been bottoming or improving in recent months. They said that “One of the indicators we monitor has indeed turned up. Sequential growth in projects under implementation across all three categories infrastructure, capex and construction has moved up in the past Q1 to Q2, indicating that the worst is probably over.”

Although, steelmakers are yet to report a spurt in sales, this year is generally better than the previous one. TATA Steel, country’s largest steelmaker, said that its sales for the H1 of the year were at 3.31 million tonne as against 3.24 million tonne in the same period last year.

SAIL said that it is seeing a demand pickup in the recent weeks. This demand push in long steel metal is giving steelmakers the required confidence to push prices upwards. With the increase in long steel demand which is used in infrastructure and the construction sector, even flat steel sales and prices are looking up.