As prices of iron ore and coking coal, the main raw materials of steel, have declined sharply in last one year, steel manufacturers including Tata Steel were supposed to gain from it but the company was unable do so because of high volume steel imports from other countries.
A statement from Tata steel stated, “Iron ore has dropped to around $40 per ton from around $68 per ton while coking coal has dropped to around $80 per ton from $115 per ton. That means the raw materials came down 41.17% and 30.43% respectively in the one year period. But during this time, steel exports from countries such as China, Russia, Korea and Japan have surged to all-time highs on the back of lacklustre domestic demand in those countries.”
As a result, global steel prices declined sharply by 43.47% to around $260 per ton, from around $460 per ton. Hence the gain from lower raw material was offset.
However, Goutam Chakraborty, Stock Market Analyst, Emkay Global, told ISMW, “Tata Steel and SAIL don’t even feel the advantage of drop in iron ore price because they have their own mines and supply chain.”