Steel prices hit 4-yr high on rise in cost amid strong demand
21 Sept, 23:45 IST · Plays out within days · 1 source
Mumbai steel hit a 4-year high at Rs 63,900, helping Tata Steel, JSW Steel and SAIL while squeezing Tata Motors, wheel and AC makers on higher costs.
Key facts
What the reporting establishes, before any reading of it.
- Mumbai HRC Rs 63,900 per tonne, up Rs 1,200
- CRC Rs 73,500 per tonne, up Rs 1,300
- Prices at 4-year high on cost and demand
How the news spreads
Step by step — from the first companies it hits to whole sectors.
Who it hits first
- Mumbai steel prices jumped to a 4-year high, with flat steel for cars and appliances (HRC) at Rs 63,900 a tonne, up Rs 1,200, and smooth steel sheet (CRC) at Rs 73,500, up Rs 1,300.
- Tata Steel, JSW Steel and Steel Authority of India, the big steelmakers, can charge more right away, so their sales and profits should rise.
- Tata Motors, its truck and car units, Steel Strips Wheels and Voltas, which buy lots of steel, now face higher costs that squeeze their profits.
Who may gain
- Tata Steel (steelmaker)
- JSW Steel (steelmaker)
- Steel Authority of India (government steelmaker)
- Tata Power (power supplier to Tata Steel)
- JSW Energy (power supplier to JSW Steel)
- JSW Infrastructure (ports and transport for JSW Steel)
Along the supply chain
Downstream
Builders, car makers like Maruti and Mahindra, and home goods makers like Voltas pay more for steel wire and sheets, which may lift vehicle and appliance prices or cut their margins.
Upstream
Iron ore, coal and power providers such as NMDC, Coal India, Tata Power and JSW Energy should see steady orders as steel plants run hard to meet strong demand.
Where demand moves
Business
Car, truck and appliance makers need the same steel but must pay more, so cash moves from buyers like Tata Motors to sellers like Tata Steel.
Capital
Investors are likely to buy steelmaker shares on hopes of higher earnings and go careful on car and appliance shares until those firms can raise prices.
How it spreads across sectors
Automobile and Auto Components
Higher steel sheet costs squeeze car, truck and parts makers until they raise prices.
Capital Goods
Machine and truck builders pay more for steel inputs, pressuring margins.
Consumer Durables
Appliance makers like Voltas face higher sheet costs for AC units.
Power
Power sellers to steel plants see steady demand as mills run hard.
Steel
Higher HRC and CRC prices lift sales value and earnings for steelmakers.
Commodity angle
Commodity
steel
Move series
Steel
Note
Steel prices jumped 3.809% to 1280 USD per short ton with Mumbai HRC at Rs 63,900; the 95.22 bps margin hit was used for Tata Motors while steelmakers with null bps were judged on higher selling prices.
Shock
price
Unit
USD/short ton
When it plays out
Immediate
In 1-7 days steel shares firm on price news while car and appliance shares wobble on cost worries.
Medium term
In 1-6 months if demand stays strong steel profits hold, but if buyers cut back or raw costs jump the gains fade.
Short term
In 1-4 weeks steelmakers report better takings while buyers try to pass costs on or trim orders.