By D Roy and C Yang, Bloomberg
Mumbai: Uttam Galva Steels Ltd, India’s second-largest maker of galvanized and cold-rolled steel, plans to raise prices by more than a fifth in next month to take advantage of soaring demand for homes, cars and home appliances.
Prices of cold-rolled steel used in cars and refrigerators will be increased by Rs6,652 ($150) or 22%, to about Rs37,000 for long-term buyers, finance director Ankit Miglani said. Galvanized steel, used in construction, will cost about 4% more at about Rs52,000.
Buoyant demand in the auto and housing sectors have spurred the price hike. Sales at the nation’s biggest carmakers Maruti Udyog Ltd and Hyundai Motor Co. and their local rivals are increasing as rising disposable incomes make cars and home appliances more affordable. India, Asia’s fourth-largest economy, is expected to expand at a record pace of 9.2% in the year ending March 2007.
“Steel prices are likely to remain buoyant,” said Sanjay Makhija, vice president at Mumbai-based brokerage Fortune Financial Services Ltd. “The government cannot artificially keep prices subdued for long.”
India’s ruling Congress party, which lost two provincial elections in February as inflation eroded the spending power of the people, this month asked steelmakers to lower prices of hot- rolled coils by Rs500 to Rs27,000 a tonne. Some steelmakers including Tata Steel Ltd reduced the prices of bars by Rs700 a tonne.
“The rollback was for generic products,” Makhija said.
Uttam Galva doubled its capacity for cold-rolled steel to 1 million tonnes a year and plans to increase its capacity for galvanized steel to 800,000 tonnes from 400,000 tonnes by June, Miglani said.
The company is setting up a $60 million plant in Ghana with the UK’s Liberty Commodities Ltd to make metal for the automobile and construction industries. Uttam Galva will increase the investment in the factory to $100 million in the next four years because it plans to make Ghana as the export base for other African countries, Miglani said.
“We’ve been selling in Ghana for the past six years and this country gives us access to other land-locked countries in that region,” he said.
Uttam Glava is also looking at acquiring companies overseas to gain access to mature markets, he said. The company sells 70% of its products in 123 countries, according to its web site.