In an interview with CNBC-TV18, Mr Sushil Maroo deputy MD of Jindal Steel & Power Limited, spoke about the hike in steel prices.
Here is a verbatim transcript of an exclusive interview with Mr Sushil Maroo on CNBC-TV18
Q - Is a steel price hike imminent post the excise duty rollback in the Budget?
A - The price in long product is different than a flat product. It’s more on the ongoing supply and demand basis for the long products. The demand is quite stable and prices are strong. So I feel that the excise duty probably will be borne in certain manner by the ultimate consumers and companies. So who will bear it and by how much will depend on the demand and supply scenario but it will be basically with both.
Q - Is steel price hike on the cards?
A - Steel prices are going up because of the demand and cost push also like the excise duty is there. In the international markets, we are seeing the iron ore prices, coking coal prices and thermal coal prices going up so because of all these reasons steel making has become expensive. To some extent, the part of the costs was passed on to ultimate consumers. Accordingly, the price rise will take place but when it takes place depends on the ongoing basis. There is no specific timeline that we have to announce it as INR 500 to INR 600 hike and it all gets adjusted on an ongoing basis based on demand and supply scenario but yes prices are going to go up.
Q - Does high input cost impact margins?
A - Last year most of the companies did the coking coal business on a contracting basis from USD 125 to USD 165. The same coking coal is now available at USD 200 and the companies are asking for the next year contracts at about USD 200 to USD 225. Based on whatever the coking coal price gets finalized on a long term basis, steel prices would go up but steel prices cannot go up completely or it cannot be passed on completely. To that extent, the margins of the companies would be affected and it will have some impact but it’s very difficult to predict how much it would be.
(Sourced from CNBC TV 18)
