The Hindu Business Line : Steel manufacturers to meet Paswan

New Delhi, March 2 Domestic steel manufacturers have sought the Steel Ministry’s intervention to restrain National Mineral Development Corporation (NMDC) from affecting a major hike in iron ore prices.

The steel manufacturers will be making a presentation on the issue to the Union Minister for Steel, Chemicals and Fertilisers, Mr Ram Vilas Paswan, on Monday.

“It’s now the turn of the Ministry to walk the talk. Having got the major producers to roll back prices recently, they have to now tell the PSU mining companies to restrain from resorting to another round of price hike on iron ore in April,” an industry source told Business Line.

It is learnt that the steel majors will be demanding offsetting the mid-term price hike against the anticipated hike in iron ore at the time of firming up the new annual sourcing contracts in April.

“This would mean that NMDC will have to limit the iron ore price hike to below 18 per cent in the new long-term agreements, which would be signed in April, as it has already increased prices by 47.5 per cent effective from October 1, 2007,” the source said.

The move assumes significance in the backdrop of the Japanese Steel Mills agreeing to a 65 per cent increase on iron ore prices in 2008-09 with the Brazilian mining major Cia Vale do Rio Doce.

There is also a possibility that the rise in iron ore prices may be steeper. Australia’s Rio Tinto and BHP Billiton — the world’s largest mining companies — are still negotiating for a bigger price hike with China. International agreements on price increase often act as a benchmark for the Indian mining companies to increase prices for domestic consumers.

Even NMDC officials, including its Chairman and Managing Director, Mr Rana Som, have indicated that the price hike will be around the 65 per cent mark and will be effective from April 1.

Essar Steel, Ispat Industries, JSW Steel and Vikram Ispat are a couple of the manufacturers who have long-term sourcing agreements with NMDC.

“If the Ministry does not intervene now, then steel prices could witness a significant increase and a roll back this time round might be difficult,” the source said.

If NMDC actually goes in for such a steep hike, steel prices are expected to increase by $100 to $125 a tonne by April - or Rs 4,000 to Rs 5,000 per tonne in the domestic market.

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