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Steel companies hike prices for January sales
The domestic steel companies have hiked prices by 3-5%, the second price increase in two
months, due high raw material costs. For the January-March 2011 quarter, settlement of
the benchmark coking coal contracts is higher by 7.7% at US $225/tonne (US $209/tonne
for October–December 2010). In case of the iron ore negotiations, media reports suggest
a hike of 7-8% over 3QFY2011. While SAIL hiked its product prices by 3%, JSW Steel has
raised prices by 4-5% and Essar Steel has hiked prices by 5%. Media reported that Tata
Steel though, yet to announce a price increase, it has hiked the rebar prices by
`2,500/tonne for retail sales. Going ahead, we expect the steel prices to remain firm on
account of: 1) seasonally strong demand conditions, 2) high raw material prices as floods
have hit Australia’s mining regions. We maintain an Accumulate on Tata Steel (Target Price
of `768) and JSW Steel (Target Price of `1,310).
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