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Shooting iron ore price makes steel production unviable

By Staff
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Kolkata, Feb 23 (UNI) A staggering imbalance between the increase in the prices of iron ore and steel has made steel production unviable, industry sources said.

Being unable to catch hold of the tail of a skyrocketing 227 per cent jump in the cost of the basic raw material over the past three years, the domestic steel producers are left grappling with only about 54 per cent increase in the price of their finished products in the market, industry sources said.

''The price increase of iron ore between April 2003 and January 2006 is astounding. But the steel producers are not in a position to take the advantage and hike the price of their products matchingly.

The situation is more difficult for those who do not have captive iron ore mines,'' the sources said.

They pointed out that while iron producers hiked the prices to Rs. 2,027 per ton from Rs. 619.50 during the period, steel prices were only Rs. 20,000 per ton rising from the starting point of Rs.

12,500 in the first quarter of 2003. Over the period steel prices touched its peak only at Rs. 26,500 per ton during the first two months of this fiscal.

''What is needed to protect the steel industry is to put a moratorium on iron ore exports from the country so that prices of the basic raw material remains confined within a limit,'' they said.

Of the total 140 million tons of iron ore produced in the country, 60 per cent were meant for export especially to countries like China, Japan and South Korea where massive construction activities were going on, the sources said.

They pointed out that production of only half the quantity of a total of 36 million tons of steel in the country had the facility of accessing captive iron ore.

So adamant had been the iron ore price that even the 24.50 per cent decline that brought steel price to Rs. 20,000 from Rs. 26,500 in May and December 2005 failed to force a price cut in the basic input, the sources said.

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