There is a need to control energy prices across the globe as rising crude oil rates, amid the Ukraine-Russia conflict, are making raw materials costlier for the steel industry, according to a top industry executive.
On the ongoing conflict between the two countries, Jindal Steel and Power Ltd (JSPL) Managing Director V R Sharma said, "It is a very unfortunate situation. Some oil companies are taking advantage of the situation... Respective governments across the world can keep a price control as everything is run by energy."
As the oil prices are going up, the freight rates are also moving in an upward direction impacting the cost of raw materials, he told PTI.
Sharma said that before the conflict between Russia and Ukraine began, the oil prices were at $90 a barrel. The rates are now trading near $120 a barrel and there is a projection that it would reach $180 a barrel in a few days.
As oil prices have gone up, freight rates of cargo ships, which currently stand at $20,000 a day, are likely to reach $30,000 per day.
Similarly, coal prices are also rising. Coking coal has breached the $550-a-tonne mark, from $250 a tonne before the crisis began.
India meets 85 per cent of its coking coal requirement from imports.
Besides coking coal, iron ore is another key raw material used in steel making by companies in India.
"Iron ore has also moved up. NMDC (the country's largest iron ore producer) has increased the prices twice...current price is Rs 10,000 a tonne lump. Because of it, sponge iron and pig iron is also high. Energy prices are main reason behind all this," he said.
Such developments, he said, will have an impact on the production cost of steel.
According to industry sources, domestic steel makers have already hiked the prices of hot-rolled coil (HRC) and TMT bars by up to Rs 5,000 per tonne as supply chain is being impacted amid the ongoing Russia-Ukraine conflict.
According to them, the prices have been increased in the past few days and are expected to go up further in the coming weeks with the crisis deepening between the two countries.
After the price revision, a tonne of HRC will cost around Rs 66,000, while the buyers will get TMT bars for about Rs 65,000 per tonne.
HRC and TMT bars are used in industries such as auto, appliances, construction, and real estate.