Additional levy besets the Indian steel producers

Author: Paul Ploumis
29 Sep 2014 Last updated at 04:58:10 GMT
NEW DELHI (Scrap Monster):This criteria might create a decline in the profitability of the companies to about, 10 percent, and any further increase of iron prices from the steel companies can jack up the price of iron ore in the market further more and create distress for the second grade steel producers, stated ICRA, the Indian rating agency.

According to the Supreme Court Judge, the 12 coal blocks which were allocated for the distribution of coal for iron and steel industry, has increased in the capacity of 14.58 million tones per year, is now found to be be allocated.

This declaration might have an adverse effect on the cost structure of the production of 4.75 million tones per annum, associated with 1713 MW, and also the production of 8.5 million tones per annum, which would need more coal from the sources outside the sources to compete with the fuel requirements.

This would have a more adverse impact on the integrated steel producers who make use of soft iron as well as EAF/IF route for making steel rather than the producers making use of the blast furnace method. The loss of integrated steel makers is estimated to be 10 percent, in order to replace all the amount of captive coal in the imported coal, at the same impact will remain reduced by 2.5 percent.

Even though the second grade steel producers are not so much affected by the de-allocations directly, any kind of increase in the soft iron prices for the integrated producers would put up the price4 of iron ore.