Steel players in the country have decried the state-run mining major NMDC?s move to raise contract prices of steelmaking material by as much as 40% with retrospective effect from April 1, this year. Non-integrated steel players met the government last week and expressed their concern about the move to hike iron ore prices, which will hit steel players like JSW Steel, Essar, Steel, Ispat Industries Ltd and Rashtriya Ispat Nigam Ltd.
Not giving any specifics, a spokesperson from Essar Steel Ltd said, ?This point has been brought to the notice of the government that when steel prices are softening, NMDC should reduce prices of iron ore and not increase it.?
The prices of fines have been increased by 10.5%, while that of lumps were raised by as much as 40%.
Anil Surekha, executive director- finance of Ispat Industries Ltd said, ?Our margins would be impacted by this hike. Hence, we have urged the government to review the decision made by NMDC to hike iron ore prices.?
Calls made to Seshagiri Rao, director-finance, JSW Steel went unanswered.
It will be an added woe for steel manufacturers as they will have to pay more for iron ore, despite a cut in output by most of the companies because of slowing demand and shrinking of new order pipeline.
According to experts, the impact on margins of non-integrated steel players would be around 0.5%.
?I don?t see a significant impact as the current hike in the prices of contract iron ore by NMDC is still 40-45% lower than international contract iron ore prices,? said Tarang Bhanushali, an analyst with India Infoline.
NMDC charged Rs 1,783 a tonne for iron ore fines as of October 1 last year. However, iron ore prices in the spot market in India is about Rs 3,000 to 3,200 per tonne.