West Asia conflict to impact SAIL steel prices marginally

State-owned SAIL expects the ongoing West Asia crisis to have only a marginal impact on its steel prices and is establishing alternative shipping routes to ensure the uninterrupted supply of raw material from the region, a top company executive said. The company buys raw materials, such as limestone from Dubai, Ashok Panda, the newly appointed chairman of the steel major, said.

“So far as SAIL is concerned, we will have some impact with respect to the fluxes, limestone, et cetera, which we are buying from Dubai. So, the landed cost, the CFR (cost and freight) cost is going to go up, because it was around USD 23-24, now it will be around USD 35,” the official said in reply to a question related to the impact of the West Asia crisis. But overall, in sellable steel, its impact will be hardly Rs 100 or Rs 200, the chairman said.

Panda also said that in times of crisis, the availability of raw materials is crucial rather than their cost for uninterrupted operations and that SAIL is working towards tying up with parties to secure larger quantities from West Asia through diverted routes.

“It is more of a raw material security than a price increase. We are working towards tying up with the parties to get more quantities from the Middle East through diverted routes,” he noted.

Iron ore and coking coal are the two key raw materials used in steel making through the blast furnace process. While SAIL meets 100 per cent of its iron ore demand from its captive mines, the company sources a major part of its coking coal needs from offshore markets, such as Australia and Russia.

Limestone, one of the fluxes used in steelmaking via the blast furnace route, acts as an agent to remove impurities such as silica, phosphorus, and sulphur from molten iron.

“And so far as fuel is concerned...concern was there in the fourth quarter, but we have come out of it by using PNG in certain locations and creating LPG banks in other locations. So, that’s not going to be a major challenge for us in the first quarter,” he said.