On a comparative note, prices of steel products haven’t swelled as much as their ingredients, leaving steelmakers in soup.
According to market data, the price of steel TMT bars gained only four per cent in the past three months, inching up from Rs 42,300 to Rs 44,000 per tonne.
“Between April and July this year, steel prices got reduced by 4.8 per cent, going down from Rs 41300 to Rs 39300 per tonne whereas lumps prices over the comparable period shot up 14 per cent. Prices of fines, too, were up 15 per cent. The mellowing international prices are not reflected in the domestic markets where prices are hardening to the detriment of the steel industry”, said an official with a steel company.
Some end-user steel and pellet industries feel that the crisis pronounced in Odisha is largely due to miners deliberately reporting underproduction of the approved limits to keep iron ore prices buoyant. Odisha, the largest producer, has a total iron ore mining capacity of 163.80 million tonnes (mt). Of this, the merchant or non-captive lessees have approvals to mine 118.35 mt. In FY18, 26 non-captive miners in the state despatched 67 mt, denoting 65.79 per cent of their approved EC (environment clearance) limit of 101.96 mt. Iron ore despatches have been well below the agreed EC limits as between FY14 and FY18, they never exceeded 70 per cent.
A leading iron ore miner, however, sought to allay concerns on prices. “A stable demand is firming up prices and we expect it to stay robust in the near term. Had the demand been weak, there would be no lifting of ore. The end use industry has often been at loggerheads with the miners without realising that prices are dictated by market demand. If you see closely, prices of pellets and sponge iron have also moved up.”
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“With mines getting older, there is spurt in production of lower grade fines for which there are no takers. There is a tendency to load on the cost of the lower grade material on to the high-grade fines”, he added.