If Indian Railways has its way, then steel prices in the domestic market could soften a bit. The Ministry has decided to give 25 per cent discount on tariffs on domestic iron ore freight booked to ports. The idea is to tame that part of inflation caused by rising steel prices and bail out steel companies that are battling rising costs of inputs. Earlier, the Railways had abolished a port congestion surcharge.Railway officials supervising freight movement reckon the discount, when implemented, would translate into a saving of Rs 100 per tonne for a distance up to 350 km. The saving can go up to Rs 500 depending on the distance to the port.
The discount will help steel makers such as Essar Steel, Ispat Industries, and Vikram Ispat that procure iron ore from outside unlike the steel industries in Hospet area in Karnataka, which are located close to the mines. “This is a good move and will benefit industries that get ore from faroff places,” says Vinod Nowal, Director (Commercial), JSW Steel, Hospet, Karnataka. He believes steel prices will drop further if all major users of steel buy their stock directly from steel mills, rather than through middlemen.
This will help them get direct advantage of price, Nowal says.