The Hindu Business Line : Rollback of steel prices difficult, say producers

Steel woes
Steel cos feel that in the coming months there might not be such a drastic increase in the prices.
NMDC sees an increase of up to 50 per cent by April on iron ore prices.
Steel industry seeks cut in Railway freight charges.

New Delhi, Feb. 13 The major domestic steel producers feel that the possibility of a roll back of the prices looks difficult in the current scenario of spiralling input costs.

“Looking at the prevailing scenario where the input costs are increasing every month, the call by the Government to roll-back prices seems unlikely. However, we feel that in the coming months there might not be such a drastic increase in the prices,” a company official told Business Line.

It is also learnt that the Steel Ministry has called for another meeting with the major producers on the issue on Thursday. The first meeting between Ministry officials and the major producers was held on Tuesday when the industry representatives presented their reasons on the recent increase in prices.

“On one hand, the Government is calling for a roll back in the prices, while their own PSUs, which supply the raw materials, are indicating a price hike in the coming months. So, with the input cost rising and expected to rise further how can we cut the prices,” another industry source said.

NMDC sees hike

On Tuesday, the country’s biggest miner, National Mineral Development Corporation Ltd (NMDC), indicated that there could be an increase of up to 50 per cent by April on iron ore prices.

“Price hikes in the international markets are determined mainly by Australian, Brazilian and Japanese iron ore positions. We anticipate the increase in the international market to be around 40-50 per cent by April and we might also look at an increase in alignment with the international market,” said Mr V.K. Jain, Director (Production), NMDC.

Industry sources also said that Kudremukh Iron Ore Company (KIOCL) has also been increasing prices.

They also said that a couple of proposals have been put before the Ministry for their consideration. “One of the major demands is for NMDC to supply iron ore to steel companies without captive mines at cost plus formula and for KIOCL to supply pellets also at a cost plus formula,” they said.

The industry has also demanded that the railway freight has to be reduced and the congestion charges by railways for transportation of iron ore to ports must be removed.

According to estimates, the port congestion charges have gone up from 21 per cent to 60 per cent in December last year.

Also the inland freight charges have gone up by 65 per cent in the last one year from Rs 650 per tonne to Rs 1,250 per tonne.

This apart, the iron ore prices have touched $150 in December from $59 in February last year, and coal prices have gone up by more than 200 per cent in the last eight months.

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