Recent rail freight hike announced by Indian Railway Ministry on goods freight by 6.5% will increase production cost to a certain extent but not enough that it will give chance for manufacturers to raise their prices.
In absolute terms, total impact of Iron ore & Coal would not be more than INR 120-300/MT (USD 2-5/MT) in total cost of steel making.
“Total increase in freight cost of Iron ore would be around INR 60-70/MT and Coal would be around INR 30-40/MT. Net increase in production cost is around INR 150/MT. This is a nominal hike and cannot be considered as base for rising prices. Prices will be driven by demand & supply,” said a large scale Sponge iron manufacturer based in Raipur, Chhattisgarh.
On similar lines, Sponge iron & Billet traders based in Punjab mentioned that incremental cost of transport would be below INR 200/MT (if material transported from Odisha or Bengal).
Key Iron Ore Routes
|
Route |
Increment (INR/MT) |
|
Barbil- Raipur |
60 |
|
Barbil- Raipur |
40 |
|
Barbil- Durgapur |
35 |
|
Barbil- Rourkela |
25-30 |
|
NMDC- Vizag |
60 |
|
RNJP- JSWT |
15 |
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