Indian Steel Companies Mull Price Hike On Raw Material Shortages

A severe shortage of critical raw materials — coke and coal — is looming large over the steel industry in India. Even as finance minister Jaswant Singh announced a four percent reduction on special additional duty and reduction of excise duty on raw materials, steel-makers are voicing concerns about the ever-rising global prices of coke and coal which almost all Indian steel makers import.

An industry official said, over the past few days, the price of coke has risen from about $250 to $300 a metric ton. Coal too has risen from $55 to $90 and, according to analysts it will continue to rise due to an acute shortage. Prices of other raw materials like iron ore, scrap iron and naphtha have also been steadily moving upwards.

Mukand Ltd managing director Niraj Bajaj said that rising input costs have now become an increasing concern even as costs of coke have almost doubled. “There is also a shortage of coal in the global markets. For Indian manufacturers this rise in input costs is a cause for concern,” Bajaj said.

Bajaj noted that if the situation did not improve, it might become a very serious problem for the steel industry in India.

Industry officials state that in some areas, there is no supply of coal due to global shortage and they pointed out that as a result of an increase in steel consumption and spiraling raw material prices, it is very likely that hot-rolled coil manufacturers will be increasing prices in the next two weeks or so.

In an effort to combat this, most large Indian steel producers such as Tata Steel, Steel Authority of India Ltd, Jindal Iron and Steel Company Ltd, Essar Steel and Mukand Ltd are now working on improving yields as one of the best ways of combating rising costs, as well as working on efficiency levels.

One analyst said that with most steel makers increasing the production targets, there is a greater demand for raw materials and power that could aggravate the entire situation in the days to come. Financial Express