Steel maker Essar Steel is said to have increased price of flat steel products and other steel makers are also in the process of raising the price of their products on the back of increase in input costs.

   Steel makers said that they were holding price hike for a long time, but now it has to be passed on to the customers. In the past couple of months, prices of coking coal and iron ore have increased by about $10-$20 a tonne.

   Media reports suggest that steel firms may raise prices by Rs 1,500-2,000 a tonne mostly in flat products and this hike would be far more than the Rs 500 a tonne hike in prices in August. Many steel companies are said to be negotiating with customers and are likely to follow suit shortly.

   After an increase in steel prices globally, domestic prices would be at the same level as landed cost of imports. After the increase, the ruling price of hot rolled coil (HRC), the benchmark for flat steel products, would be around Rs 34,000 a tonne. Flat steel is mainly used in the automobiles and white goods sectors.

   Though the increase in steel prices indicates that the market is in a position to absorb, reflecting a better demand scenario, it’s unlikely to improve the average capacity utilisation by the industry, which is to the tune of 70-80 per cent.

   Steel companies in India are said to be operating their plants below capacity owing to scarcity of raw material and not because of muted demand.