VSP hikes steel prices by 22%

Visakhapatnam Steel Plant (VSP), has increased steel prices between 20 and 22 per cent on all products and expects the same trend to continue in the next fiscal also.

"During the next fiscal our inputs costs will go up by around Rs 1,200 crore. Cost of all main raw materials and freight rates are increasing abnormally and in this situation a price hike is the only way to run this plant," Y Siva Sagar Rao, director (commercial), VSP, told media persons here on Tuesday.

VSP's coking coal requirement is around 30 lakh tonnes per year, and during the current year the company has paid about $46 per tonne to Australian suppliers. From the next year the company has agreed to pay $58 per tonne for 21 lakh tonnes.

For the remaining nine lakh tonnes, suppliers are asking $130 per tonne and hence the company has not signed any agreement, Rao said.

VSP imports close to 2.5 lakh tonnes of coke every year, now the Chinese coke suppliers are demanding $500 per tonne instead of $80 per tonnes, he said.

In the current year, VSP has paid $18 per tonne for limestone and for the next fiscal foreign suppliers are demanding $30 per tonne. "Our limestone requirement is around five lakh tonnes per annum," he said.

Likewise, the state-owned National Mineral Development Corporation is also planning to increase iron ore prices. VSP is getting fine ore at Rs 315 per tonne and paying Rs 450 per tonne for lump ore.

"VSP's iron ore requirement is around 55 lakh tonnes per year and now NMDC wants us to pay Rs 400 per tonne for fine ore and Rs 600 per tonne for lump ore for the next fiscal," Rao said, adding, "In such a scenario, if we don't increase steel prices, how can we run this giant unit?"

"At present, we do not have face any shortage for coking coal. Recently we have lined up coking coal supplies and up to the end of March there will be no problem for production in VSP. For the next fiscal also we have signed agreements with some Australian suppliers for supply of 21 lakh tonnes of coking coal," he said.