Yearend — India must fix mis-coordinated policy to check soaring steel prices


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Indian steel prices have shot up by 55% on the back of soaring global prices and an acute shortage of iron-ore in the domestic market, drawing the attention of the central government on possible remedial measures to contain its impact on the manufacturing sector.

Industry officials say that measures to relieve tight iron-ore supplies are likely to be introduced both in the run-up as well as the annual February budget. That as capacity utilization in the domestic steel industry has steadily improved since the lockdown in March.

For example the average utilisation rates at leading Indian steelmaker JSW’s plants rose to 86% in the second quarter (July-Sept) of the current fiscal year from 66% in the previous quarter.

At the same time, this has come at a time when prices of flat steel in the world’s largest manufacturer China has surged, with the export hot-rolled coil index rising to near $600 per ton during the month from $519 per ton previously, and the monthly average increasing by 7.5% over October.

Hot-rolled coil prices in the United States continue at record highs, $1,000 per ton, which is the highest level since the steel bull rush of 2008. 

Tokyo Steel Manufacturing Co Ltd , Japan’s top electric-arc furnace steelmaker, plns to raise prices in January for all its steel products by 10,000 yen ($97) a tonne, or 11% to 16%, reflecting firmer overseas steel prices.

Soaring prices of steel have come at a time when Prime Minister Modi has outlined a vision for Atma Nirbhar Bharat with a strong focus on building global capabilities in manufacturing. Production-linked incentives have been announced for as many as 10 sectors.

Fundamental problem

But those hopes may not take off until the government solves the fundamental problem of containing high steel prices. From automobiles to consumer goods, steel is a basic ingredient and its price impact is bound to significantly increase prices of manufactured goods.

India, the world’s second-largest steelmaker India has set itself a target to more than double its steel production capacity to 160 million tons in less than a decade, if it were to realise its target of 300 million tons production capacity by 2030.

That capacity should be enough to largely fulfil India’s steel needs, but currently domestic iron-ore prices have shot up by as much as 50% since March, which in turn is putting pressure on Indian steel prices. While the country has abundant reserves of iron-ore, haphazard policies have impacted mining.

Until about a decade ago, mineral exports from Goa and Karnataka used to contribute substantially to world trade, until the issues over licensing and environmental degradation dried up these sources of revenue.  

Odisha and Jharkhand are so rich in reserves of iron-ore that mining experts have often called them as potentially the next Australia. The geological structure of the Indian subcontinent is similar and therefore it’s not surprising that the country has such wealth below ground.  

However, extraction of iron-ore in leading supplier Odisha has dropped by 20% this year with several mines that had been auctioned earlier this year are yet to start production.

The steel industry has asked for export curbs to be placed on domestic iron-ore shipments to China, which has seen an uptick this year. On the other hand, miners say that the government and domestic steel industry should find ways and means to lift un-utilised stocks lying at mine-heads.

Clearly, the realisation of the country’s mining and metals production will require a coordinated effort from all the players, which currently is missing. However, a degree of recognition has begun to emerge about the potential revenue impact of mining and metals directly or indirectly on the country’s GDP.     

It’s high time to end the mis-coordination in India’s mining and metals sector and have a common approach to policies so that it turns out to be a win-win situation. 

Biman Mukherji is a columnist and consulting editor at He has worked for international news organisations such as Reuters, The Wall Street Journal as well as for newspapers like The Times of India. He can be reached at

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