Increase in the price of iron ore by domestic suppliers, mainly the National Mineral Development Corporation (NMDC), has upset the steel producers.
Industry sources say the nominal increase at regular intervals in tune with the international price has impacted small and marginal producers who manufacture TMT bars.
The Rashtriya Ispat Nigam Limited (RINL), the corporate entity of Visakhapatnam Steel Plant, needs 10 million tonne of iron ore per annum to produce 6.3 million tonne of steel.
As it is the only major producer without captive mines in the country, it depends mainly on the NMDC for meeting its raw material requirement by getting it by train from Bailadilla mines in Chhattisgarh.
Sources say, though compared to the other players, it may absorb the increase in raw material price without much difficulty, but it would certainly affect its finances.
The company is already facing working capital crunch.
Signs of recovery
Only consolation for the steelmakers is that the market is showing signs of recovery.
“It has picked up well and the steel market is also doing well. The steel price has also gone up in the past two weeks,” Steel Exchange India Limited (SEIL) Director V.V. Krishna Rao told The Hindu .
He said the NMDC should not jack up the price based on some appreciation in the international market in the larger interest of small and marginal players in the industry.
He said they were producing 1,000 tonne of Simhadri TMT bars and the price of steel had also gone up by a few thousand rupees. He said the price was expected to pick up further going by the market sentiment.
With increased thrust on construction and conferring infrastructure status to logistics, the demand for steel is expected to register an impressive rise in demand. Now, premium quality steel is sold at ₹40,000 to ₹42,000 per tonne.
