The Hindu : Business : Steel companies levy surcharge

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Thursday, Apr 10, 2008
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Steel companies levy surcharge

To offset high raw material costs

NEW DELHI: In a move that is bound to attract fiscal measures from the Government, steel makers on Wednesday raised prices of their products by imposing an average ‘raw material surcharge’ of Rs. 5,000 a tonne.

“We have imposed a raw material surcharge of an average Rs. 5,000 a tonne on various products owing to a steep increase in raw material prices and we will pass it on to customers,” JSW Steel Director (Finance) Seshagiri Rao told PTI.

Contract price for coal

“We import our entire coal requirement. The contract price for coal has gone up by $200 a tonne from $96 last year. We have no option but to increase the price,” he said, adding that the price of coal was as high as $400 a tonne in the spot market.

Similarly, other leading utilities such as Ispat, Essar and Tata have hiked the prices of their produces by levying the raw material surcharge, an industry source said.

However, when contacted, spokespersons of Essar and Ispat did not comment, while Tata Steel spokesman was not available for comments.

But state-run steel giant SAIL emphatically denied levying any surcharge. SAIL spokesman said the company had not taken any decision on the same.

Justifying the rise in prices, a steel industry official said raw material prices had shot up. Besides a steep rise in iron ore prices, coking coal prices had gone up by more than 200 per cent.

“We have repeatedly expressed our concern to the Government that we need raw material security and moderate freight rates, none of which is forthcoming.

The tremendous cost push is likely to rip through our bottom lines,” he said. — PTI

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