Sponge iron prices firmed up last week by Rs 500 in anticipation that the government would restrict imports of unshredded scrap from war-torn countries, resulting in a decline in the availability of raw materials for steelmaking. | |
| A majority of unshredded steel scrap is imported to India from war-ravaged countries like Iraq. Iron ore producers also face threats from naxalites in mining rich regions like Jharkhand, Orissa and Andhra Pradesh. The threat during the current season has doubled resulting in prices going up. On top, the industry is also facing disruption in the supply of iron ore, a major raw material, due to floods in major producing states, including Karnataka, Gujarat, Maharashtra and Kerala. |
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| After three months of downward price pressure, the price of raw material for steelmaking has risen to Rs 12,500 a tonne last week from the Rs 12,000 level during the week ended July 14 and Rs 14,000 a tonne in April. |
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| The government is seemingly concerned about the imports of steel scrap from war-torn countries that caused the death of nine and injured a dozen workers in an explosion that took place in Bhushan Steel premises three years ago. Live cartridges have also been found in other consignments. |
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| The transportation of iron ore from mines to processing units also pose a major challenge for sponge iron producers till the end of monsoon. Consequently, steel producers are likely to have no respite till the sponge iron price normalises again. Currently, none of the sponge iron producers are operating to full capacity as the required raw material is not available. |
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| Meanwhile, iron ore price has also jumped by Rs 250-300 across all varieties amid rising demand and lower supplies. |
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| "This is a temporary phenomena and will be overcome by August-end," said Amitabh Mudgal of Monnet Ispat, one of the leading sponge iron producers in the country. |
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| India imports a huge quantity of unshredded scrap, a substitute of sponge iron for steelmaking. But if the government restricts unshredded scrap imports then the price of this raw material can go up to $450 a tonne from the current level of about $400 a tonne, an industry source said. |
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| Despite the problems, the official hoped the second quarter of the current financial year to remain favourable for the steel and raw material sectors as construction activities in major cities would commence by then. |
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