Reasons for Steel Price Hike & Its Effects on Other Industries

In addition to the external state government and housing schemes, the disturbing surge in steel price hike throughout the last 45 days is expected to reach about Rs 14,410 crore worth of National Highway Authority of India (NHAI) activities in the area.

Over the last 45 days, TMT steel costs have jumped by about 25 percent. Enhanced cost estimate for building projects has also culminated. The elevated prices and the sluggish supply of TMT steel also seriously affected the continuing highway operations.

Statements of various experts:

Now the project goals prepared by the Department of Road Transport & Highways may not be fulfilled, said State Treasurer S Ramaprabhu of the Builders Association of India. “Building costs of housing development have increased by about 10%,” he continued.

Express was informed by the NHAI Regional Officer that there was a shortage of steel supplies at building sites. To cope with price inflation, we have a clause. It could help to make up for the price rise,’ he said.

Previously this week, Nitin Gadkari, Ministry for MSMEs and Road Transport, went down harshly on the steel and cement companies for cost buggering, for no good reason.

The wholesale cost of HRC currently stands at Rs 51,000 per tonne after the consecutive increase in December, the maximum since 2008, as per SteelMint. The current price is about 40 percent higher than in July 2020. 

Based on increasing household consumption and iron ore rates, higher foreign rates and sluggish supply, and restricted imports, rise in steel price in the domestic economy have pushed northward, experts stated.

Reason for sudden steel prices hike:

A steel industry insider told express that it was shocking how the price unexpectedly soared after October 20. “There was a surplus of iron until October, and unexpectedly it all disappeared,” he said. The president and former chairman of South India Steel Industries, Sunjoy Garg, prompted the public to suspend iron ore exports instantly. ‘A month ago, there was surplus iron ore in every steel mill,’ he said.

Today, for one tonne, TMT’s cost has risen from Rs 40,000 to Rs 50,000, and industry experts say it could increase by Rs 10,000 more. Although industrial sector operations and infrastructure programs may not be in full flow, a builder noted that it is shocking how steel costs have jumped. 

Japan and Korea, the two largest exporting countries to India other than China, have now begun to sell more to Europe. The returns are higher for these countries relative to India. Besides that, domestic consumption is now also stable in these two nations.

Increase in price of cement packages:

The cement cost underneath the Cement Supply Scheme has been raised by the Government Industries Department from Rs 190 to Rs 216 per bag as of Friday. At old prices, those that have paid in advance will purchase the cement. A letter was previously sent by Tamil Nadu Cement Corporation Limited claiming that private cement suppliers supplying cement for the project had proposed a price increase.

Government’s support package:

After the government declared the support packages and performance-related reward of 2-lakh cr across ten industries distributed over five years. The steel demand has also been keeping high to build an environment that will add 20-lakh crore value to manufacturing operations and three crore well-paying jobs.

Such industries that require policy action, including de-regulation, hand-holding, and other quality of support and rewards, are also defined by the government, particularly those areas where India has the opportunity, power, and competitiveness to produce globally.