State-owned steel major Steel Authority of India Limited said on Friday it has increased prices of its products by up to Rs 2,500 a tonne mainly on account of rising input cost.
"We have increased prices of our products in the range of Rs 2,000-2,500 a tonne mainly due to rise in raw material prices," Steel Authority of India Ltd chairman S K Roongta told reporters on the sidelines of SAIL Open Golf Tournament in New Delhi.
The increase in prices by the country's largest steel producer is effective from April 1.
He said the domestic steel prices will follow the rising global trend where the rates have gone up due to the higher iron ore and coking coal supply contracts between steel makers and international mining firms for the current quarter.
Present on the occasion, steel minister Virbhadra Singh said, "There has been a spurt in steel prices in the domestic market recently but it is a temporary phenomenon and at present there is no inflationary concern."
However, the minister cautioned that measures would be taken to control the prices if it rise abnormally.
Domestic steel producers like Tata Steel, Essar Steel, JSW are expected to follow the price hike by SAIL and increase the prices of their products.
SAIL prices generally act as the domestic benchmark.
Global mining firms like Rio Tinto, BHP Billiton, Vale are in process of entering into new iron ore and coking coal supply contracts with global steel makers.
According to industry observers, mining firms are entering into supply contracts with steel makers for the April -June quarter at about $110-120 a tonne, which is 80-100 per cent increase from the levels of 2009-10 annual contracts.
Coking coal supply contracts are reported to have been signed between Japanese steel mills and Australian miners -- Rio Tinto and BHP -- at about $200 a tonne level against last fiscal's $105-130 million tonnes.
The contracts, now reportedly for April-June quarter, work as benchmark for global steel majors.
Asked if SAIL has followed the global benchmark and signed coking coal contract deal for the current quarter at $200 a tonne, Roongta said, "Whatever is the global benchmark prices and practices are being followed by SAIL."
