Steel prices rise for third consecutive month on cost push

Steel companies have raised prices for the third month in a row, citing a surge in demand and a sharp increase in the cost of raw materials. According to a senior steel company official, geopolitical tensions have driven up expenses on imported key commodities like coking and thermal coal, as well as ferro-alloys, along with higher shipping costs.

Additionally, the rising prices of domestic fuel and power have contributed to the cost-push inflation. Hot Rolled Coil prices have climbed to ₹64,700 per tonne, up from ₹62,000 in September, as reported by BigMint, an online market intelligence platform.

Despite broader inflationary concerns, domestic steel demand continues to be robust, driven by government-led infrastructure projects and urban real estate growth. India's steel consumption is expected to expand by approximately 7.9 percent, outpacing major global markets. Although price-sensitive retail segments may encounter short-term volume delays, institutional and infrastructure-heavy demand appears poised for sustained momentum.

Analysts attribute the upward trend in steel prices to soaring global coking coal costs, iron ore supply constraints, and escalating energy expenses. Post-monsoon restocking and steady industrial consumption are providing manufacturers with the pricing power to pass on these increased input costs. With key inputs such as coking coal and iron ore prices anticipated to remain high or continue rising due to supply-side bottlenecks and geopolitical logistics challenges, steel mills are likely to maintain defensive pricing floors, making significant downward adjustments improbable throughout the remainder of the year.

Senior Research Analyst Antu Eapen Thomas from Geojit Investments notes that in addition to raw material price hikes, supply-side constraints due to maintenance shutdowns at some mills have tightened near-term availability. Moreover, imports have become less competitive due to safeguard duties and a weaker rupee. Domestic steel producers have implemented multiple price increases since September, pushing hot-rolled coil prices well above last year's levels.

Higher inflation and rising interest rates could potentially dampen demand in sectors like housing and automobiles, potentially slowing the pace of price hikes in the near future. However, Rajesh Singla, CEO and Fund Manager of Alpha AMC, believes that the latest price hike represents the tail end of a cost-push cycle that has been building since August.

The surge in prices has already reached nearly ₹4,000 per tonne, with hot-rolled coil trading around ₹64,000 per tonne, driven by a nearly 40 percent premium on coking coal imported from Australia, which has compelled steel mills to pass on the cost.