Steel makers in the country are complaining about lack of sufficient supply of iron ore, the key raw material for steel production, and also the increase in price by NMDC.
Media reports suggest that steel firms are reducing their scale of operation and hence their capacity utilisation has declined because of shortage of iron ore. These firms seek fresh supply of iron ore at viable prices in order to resume operations at full scale.
It is learnt that the total requirement of steel makers in Karnataka is 2.5 million tonne (mn t) a month. The Supreme Court, in a bid to give some relief to the steel industry, had directed NMDC to mine 1 mn t of iron ore per month.
But it is reported that NMDC was mining only 700,000 tonne. While iron ore for Karnataka steel makers is routed through e-auction, for outside the southern state, long-term agreements are in place.
Further, the rise in price of iron ore is attributed to the arbitrary change in the policy by NMDC for January-March 2012 to sell iron ore based on spot prices for long-term customers. The price was based on spot prices.
NMDC increased its prices by 8-13 per cent for July-September, based on similar principle. But it reduced it in November by 2-11 per cent.
It is learnt that Hospet Steels is operating only two of its three furnaces and may have to consider downsizing its workforce if the situation doesn’t improve in the near term.
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