The rising prices of iron ore in past two-three months has pushed up sponge iron rates by 25 per cent to Rs 24,000 a tonne, an industry body said while seeking immediate government intervention.

Iron ore is one of the main raw materials used to produce sponge iron. The other is non-coking coal.

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“Sponge iron in West Bengal, Chhattisgarh and Odisha where most of the sponge iron plants are located, is trading at Rs 24,000 per tonne, which is a rise of almost 25 per cent compared to the prices at which the commodity was being sold two-three months back,” Executive Director of Sponge Iron Manufacturers Association (SIMA) Deependra Kashiva told PTI.

He was explaining what has been the impact of iron ore price raised by state-owned NMDC.

On January 2 this year, the country’s largest iron ore miner NMDC raised prices of higher grade iron lumps and fines by Rs 500 each to Rs 3,100 and Rs 2,760 per tonne, respectively, for the current month.

The price hike in January is the third-straight rise since November 2017 when NMDC had fixed the rates of lump ore at Rs 2,300 a tonne and that of fines at Rs 2,060 a tonne. In December, it raised the price of lump ore by Rs 300 a tonne to Rs 2,600 and fines by 200 to Rs 2,260 a tonne.

Sponge iron is used in producing semi finished steel items, ingots and billets, which are further used to make various finished steel items.

Ingots and billets, made from sponge iron and scrap, are raw materials for making angles, structural and TMT used as construction material, Kashiva said, adding that the government must come forward to tackle the situation as industry is bound to pass on the higher input cost to the immediate member in the business chain.

Besides high prices, there is also shortage in supply of iron ore, which is pushing up sponge iron prices. Due to this, induction furnace industry, which produces ingots and billets, has increased rates and from them rolling mills are buying and selling TMT on higher rates, he explained.

Various construction activity is going in the society.

People are making their ‘dream homes’. Middle class person is the one who will bear the burden of this price rise, he added.

It will also hit small players who produce items like bolts, nuts, nails etc. It will affect their working capital.

The big player like JSW Steel has also expressed the same view earlier this week.

Its Chairman Sajjan Jindal took to twitter to say that a hike in iron ore prices by NMDC has left steel companies with no choice but to pass on the increased production cost to customers.

“Recent increase in iron-ore price by state owned NMDC & Orissa private miners is forcing steel companies to pass on increased cost of production,” Jindal said in the tweet.

The increased cost of other raw materials like coal, refractory, electrodes is further fuelling this and leaving no other option, he added.

Referring to the recent orders due to which mining activities have been stopped at some places, Kashiva said production needs to be raised in mineral-rich states like Odisha, where there is iron ore in abundance.

The government must jump into action to check rising prices of raw materials, he added.