ASSOCHAM

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New Delhi, Feb 8 (UNI) To counter the adverse impact of increasing input cost in the steel sector, industry body Associated Chambers of Commerce and Industry of India (ASSOCHAM) and Indian Steel Alliance (ISA) today jointly called for iron ore security and raw material availability in the country.

''The need of the hour is to enable the industry to expand and produce more by assuring them of iron ore security and raw material availability. This is the best way of bringing down prices,'' said a Assocham statement.

The cost of iron ore registered 150 per cent increase from 60 dollars a tonne in March 2007 to 150 dollars in December 2007.

Due to China's insatiable hunger for Indian iron, the last quarter of 2007 saw a sharp rise of 50 dollars a tonne in the iron ore prices, the statement said.

Even the public sector mining company, The National Mineral Development Corporation (NMDC), increased its prices by over 47 per cent, and that too with retrospective effect from October 1, 2007.

''All the steel manufacturers who have long term agreements with NMDC have been adversely affected. They have to absorb the cost impact,'' the statement said.

The prognosis for long term prices of iron ore too is not very favourable.

''Economists are predicting an increase of 50 -70 per cent even in the internationally agreed prices during 2008 and the spot prices are unpredictable,'' it added.

In the last quarter of 2007 alone, the coking coal prices went up from 160 dollars per tonne to 220 dollars per tonne, an increase of 37 per cent.

From April 2007 to January 2008, the prices rose from 96 dollars per tonne to 220 dollars per tonne.

The rise in coking coal prices alone has increased the cost of production of steel by about Rs 2,000 per tonne, it said.

The scrap prices have gone up by almost 36 per cent in the quarter ending December 2007, impacting the cost of production in this segment significantly.

Other inputs such as Ferro manganese has also registered an increase of 40 per cent in the last quarter of 2007 from Rs 51,000 to Rs 71,000 per tonne.

The silico manganese price increased from Rs 43,000 to Rs 62,000 per tonne, registering a rise of 40 per cent.

''At a time when entrepreneurs are going in for both brown field and green field expansions and steel sector is attracting the largest amount of investment in India, it would be difficult for the steel manufacturers to absorb all the cost escalation in the raw materials,'' it said.

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