Steel prices may go up by upto Rs 600 a tonne on account of 6.5 per cent increase in rail freight charges as steel makers will have to shell out more on transportation of key raw material iron ore as well as finished products.
"The margins of steel makers are likely to be impacted by the increase in freight rate and steel prices may be hiked by Rs 300 to Rs 600 a tonne," an industry analyst said.
Miners body FIMI said the hike in freight rates was bound to impact consumers as iron ore is a key steel making raw material, transported by rail by almost all steel companies.
"Any increase in freight will end up in increase of the cost of material, which consequently manufacturing industry will pass on to the consumers. The consumers ultimately will be losers," Federation of Indian Mineral Industries (FIMI) Secretary General R K Sharma told PTI.
However, companies like SAIL, JSPL and JSW Steel said they were still to estimate the impact of freight hike on them.
In a pre-Budget move, cash-strapped railways today effected a steep across-the-board hike of 14.2 per cent in passenger fares in all classes and a 6.5 per cent increase in freight rates to garner Rs 8,000 crore a year.
The decision, which will come into effect from June 25, marks implementation of an announcement of May 16, the day Lok Sabha election results came, when the hike was announced but put on hold immediately.
