Steel stocks gain on expectations of price rise

Steel stocks gain on expectations of price rise
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First Published: Thu, Apr 05 2007. 05 32 PM IST
Updated: Thu, Apr 05 2007. 05 32 PM IST
By Debarati Roy/Bloomberg
Mumbai: Shares of Tata Steel Ltd, the world’s fifth-largest producer, led other Indian steelmakers higher on expectation the companies will raise prices after lowering them last month.
The price of hot-rolled coil, a benchmark grade, may be raised by Rs1,500 a tonne, or 3.7%, to about Rs28,500 ($661) a tonne, said Giriraj Daga, an analyst at Khandwala Securities Ltd in Mumbai.
India’s government asked steelmakers to cut prices 5 March to help tame inflation that climbed to a two-year high. Gains in global prices amid rising demand for the metal has made it hard for domestic steelmakers to hold rates for long, analysts said.
“The government can’t really ask companies to keep prices suppressed for long,” Daga said. “The companies are probably waiting for inflation to stabilize before they decide on the extent of price hike.”
Mittal Steel South Africa Ltd, Africa’s biggest steelmaker, said on 30 March it will raise prices by as much as 10% from May after global prices climbed 20% over the past two months. Baoshan Steel Ltd, China’s biggest steelmaker, raised prices of its major products by up to 6.5% for the quarter ending June.
Shares of Tata Steel gained as much as 7% to Rs468, while Steel Authority of India Ltd rose 3% to Rs115.5 on the Bombay Stock Exchange. JSW Steel Ltd, India’s third-largest, rose as much 7% to Rs505.9. Uttam Galva Ltd surged 6% to 32.85 rupees.
‘Reviewing prices’
Uttam may raise prices by more than 20%, Finance Director Ankit Miglani said in a 14 March interview.
“The company is reviewing prices,” he said on 5 April.
Inflation, running at 6.39%, has stayed above the government’s tolerance level of 5% since September. That has prompted the ruling Congress party-led coalition to cut import taxes on commodities including cooking oils and metals, and freeze cement prices for a year.
Mukund Trivedy, spokesman of Steel Authority, the nation’s biggest producer of the metal, and Sanjay Choudhry, spokesman for Tata Steel, declined to comment.
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First Published: Thu, Apr 05 2007. 05 32 PM IST
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