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SAIL hikes steel prices by up to Rs 2,500 a tonne

05 Apr 2010 Evaluate

State-owned steel major SAIL has increased prices from April 1of its products by up to Rs 2,500 a tonne mainly on account of rising input cost. 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.

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. Mining firms are entering into supply contracts with steel makers for the April -June quarter at about USD 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 USD 200 a tonne level against last fiscal's USD 105-130 million tonnes. These contracts, now reportedly for April-June quarter, work as benchmark for global steel majors.

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