As the price of iron ore has increased drastically, steel price around India will observe a major price rise from August. Currently, India is one of the fastest growing economies in the world. Rapid industrialization, building of major infrastructures, plus, increasing demand from various industries that require steel such as, auto mobile have triggered this price rise.
Steel makers are not making any comments about this subject but they all admitted that there will be a sharp price increase. This is going to be another major problem for India which is currently grappling with double-digit inflation rate and high fuel cost. Steel price rise will make a significant impact on the wholesale price index.
Business Standard reports:
While state-owned Steel Authority of India and Tata Steel meet 100 per cent of their iron ore requirements from their own mines, several large producers like Essar Steel, Ispat Industries, JSW Steel and Rashtriya Ispat Nigam Ltd buy from the market. Consequently, their expenditure on iron ore is set to climb.
A large part of their demand is met by public sector National Mineral Development Corporation which has mines in Chhattisgarh and Karnataka and exports iron ore to steel mills in Japan and to Posco in South Korea.
India is the 4th largest iron-ore producing country in the world. China is now the biggest consumer of iron-ore. The country will play a major role in setting the price of iron-ore in the global market. Baosteel, the largest steel producing company in China, agreed to pay 96.5% to Rio Tinto, an Anglo-Australian mining company.
Already, top Indian car manufacturers such as, Maruti Suzuki, Hyundai Motors India, Mahindra & Mahindra, Tata Motors, and Honda Siel are getting the hit of rising steel prices. Only one month ago, these companies increased prices of their passenger carrying vehicles from Rs 6000 to Rs 30,000. The alloy steel price, which makes up 40% of the making cost of a car, has been rising rapidly. In one month, the price has risen more than 20% to Rs 3000 per metric tonne. Along with steel, prices of copper, aluminum, rubber have also increased. Now, the car makers have no other option but to go for another price rise.
Related articles:
Business Standard (1)
Business Standard (2)
Comment Preview