JSW Steel plans to hike price by ₹500-750 a tonne effective March 1. A tonne of steel costs about ₹36,000-40,000 depending on the quality. This will be the company’s third consecutive monthly price rise, despite weak demand. It has hiked steel prices due to the sharp rise in iron ore rates in Karnataka, mainly because of the huge shortage.
Other steelmakers such as Tata Steel, Essar Steel and SAIL may also raise prices in the coming days, says analysts. Despite the hike, prices will still be below what it was two years back, said a JSW Steel spokesperson, confirming the price revision.
“The hike would result in flat product prices touching the April 2012-level while long products would lag by Rs 3,500 a tonne. Even after the hike, our steel would be cheaper than imports from Europe and US,” he added.
The company expects demand for flat products to pick up from the auto sector after the Government reduced excise duty on automobiles by two percentage points to 10 per cent.
Karnataka ore shortage Reeling under huge shortage and high prices of iron ore in Karnataka, JSW Steel has been operating its plant below the installed capacity of 10 million tonnes (mt) a year.
The company recently filed a writ petition in the Supreme Court against private mining companies for fixing high base price for iron ore in Karnataka. JSW Steel, which processes 65 per cent of iron ore auctioned in Karnataka, has voiced against the base price of ₹5,000 a tonne fixed in the e-auction.
The base price for 61 per cent Fe grade iron ore will lead to final cost of ₹7,000 a tonne, including the royalty, transportation and local taxes, JSW Steel had said.
When the Supreme Court lifted the ban on mining, it ordered that iron ore be sold through e-auctions in the State for two years, which comes to an end in April 2014.
The Supreme Court classified iron ore mines in Karnataka under three categories.
The apex court lifted the ban on 22 category A and B mines. Of this, 19 are now operational and expected to produce 15 mt this fiscal.