With JSW Steel in talks with its long-term customers to revise prices upwards, other steelmakers are also preparing for a hike in steel prices. However, this doesn't bode well with the car and white goods buyers as the companies are set to pass on the hike to the consumers.

White goods (refrigerators, washing machines, air conditioners etc.,) and carmakers makers are bracing up for a price rise, as the steel producers are contemplating hiking their long-term contract prices for the current quarter. The country's largest consumer durables maker LG said it was working on a price hike after festive season. This is likely to be in categories such as refrigerators and washing machines, though the firm’s chief operating officer Y V Verma declined to indicate the quantum of the price hike. “We are still working on the details,” he said.

Samsung, the second-largest consumer durables maker, declined to indicate whether a price hike was in the offing. “There is no decision on this yet,” a Samsung spokesperson said. Videocon's group president Pradeep Dhoot also said no decision had been taken about price hikes yet. Videocon is the third-largest consumer durables maker in the country.

But industry analysts say that if LG takes a price hike, most other firms are likely to follow suit.

Steel is used in most appliances including refrigerators, washing machines, air conditioners and microwaves. Most manufacturers enter into long-term contracts with steel makers. An increase in contract prices comes as an additional cost push for consumer durable makers who are already grappling with a depreciating rupee. LG, Samsung and Videocon have already taken up prices a month ago by about one-five per cent following the fall of the rupee by nine per cent then. One more price hike will come as a rude shock to consumers.

Jayant Acharya, director (sales and marketing), JSW Steel said: “The price increase for long-term contracts are under various stages of discussions with customers. Our monthly prices have risen by three-four per cent in October. The quarterly prices, depending on the product, segment, will be finalised soon. I would not like to comment on how much it would go up but the indication is of three-four per cent.” Other steelmakers are also contemplating price hike for their long-term customers as well as spot sales in the coming month. An official from another top Mumbai-based steelmaker confirmed the company is contemplating price hike. He said that the company will take a decision post Diwali on the price hike.

Typically, a long-term steel contract can range from three to six months. Most of the contracts are up for renewals in October-November. Most of the long-term customers of steel companies are car and appliance makers.

Acharya said mostly the long-term contracts are for flat steel (used in cars and white goods). “There are some long steel (construction, infrastructure) that are also long term contracts but its very less,” he said.

Tata Motors, too, has raised prices in the month of October. Ravi Pisharody, president, commercial vehicle business unit, Tata Motors, said: “Steel prices have also gone up in the recent past. We took a price hike of almost one per cent this month as a result, we are not looking for another hike right now but its difficult to say till when will we not look at another price hike."

A senior General Motors official said: "We took a price hike on the Chevrolet Cruze which was about Rs 5,000 and we may look at another increase by November-December, taking into account the market situation prevailing then. This may again be less than one per cent".

The steelmakers are grappling with high cost because of the rupee depreciation. JSW Steel, the only big steel maker to announce its second quarter results has reported a Rs 512 crore notional loss of foreign exchange. Most steel companies are expected to take the hit on account of the rupee movement as all Indian steel companies import coking coal even though the contracted price for coking coal has come down in the present quarter.