Steel companies upset over hike in iron ore prices

The hike in iron ore prices has upset domestic steel companies which are now bracing for a spike in production costs. It is slated to affect both large steel majors who do not own captive iron ore mines as well as smaller and medium steel firms that rely on merchant ore supplies to feed their units. Companies fear, alongwith price increase in coal, refractory and other raw materials , it will force them to raise steel prices.

On Wednesday, JSW Group chairman & MD Sajjan Jindal took to Twitter to express his disappointment over the price hike announced by state run NMDC and other private miners. “Recent increase in iron-ore price by state owned #NMDC & Orissa pvt. miners is forcing steel companies to pass on increased cost of production. Increased cost of other raw materials like coal, refractory, electrodes is further fueling this & leaving no other option@SteelMinIndia” Jindal tweeted.

The move also drew sharp reaction from a top official in a leading steel company who did not wish to be named. “The price increase of Rs 500per tonne by NMDC is exorbitant resulting in supernormal profiteering in a basic raw material. It will spiral inflationary trend as steel prices will go up to absorb the increased prices of fines,” the industry source said. “It will also severely impact steel production by smaller producers as cost increase and additional cash flow will restrict production. There is a need for a regulator to address such irrational price increases,” the source added.