NEW DELHI: The third straight price hike in three months by both state-run and private iron ore producers is starting to drive up the value of steel products. Steel major JSW Steel’s chairman Sajjan Jindal on Thursday blamed the repeated price hikes for the increased costs being footed by consumers.
“The recent increase in iron-ore prices by state-owned NMDC and Odisha private miners is forcing steel companies to pass on increased cost of production,” Jindal said. The country’s largest iron ore miner, NMDC, has made three hikes since
November last year. In its latest round on January 2, NMDC increased prices of higher grade iron (lumps) by Rs 500 to Rs 3,100 per tonne for the current month. The firm also raised the prices for iron ore fines, which is inferior grade ore, by Rs 500 to Rs 2,760 per tonne. Compared to October last year, the price of iron ore lumps is higher by 35 per cent and that of fines by 34-35 per cent.
This sharp increase in rates is pushing steel firms to hike their own prices, because the iron ore price hike has been accompanied by a steady rise in the price of other input materials. “The increased cost of other raw materials like coal, refractory, electrodes is further fuelling this and leaving no other option,” Jindal pointed out.
There are other possible casualties in the steel sector. According to sources, the hike in iron ore prices is set to derail the insolvency resolution process begun by the National Company Law Tribunal in the case of sick steel firms like Essar Steel, Bhushan Steel, Monnet Ispat and Electrosteel Steels.
With the cost of steel production expected to go up by Rs 1,200-1,300 per tonne, asset values of sick steel firm might see further write-downs if they cannot rummage up enough working capital and face a shut down.