India’s Ministry of Steel has assured domestic steel producers that it will undertake measures to reduce logistical costs, which have increased to as high as 28 percent, government officials said on Thursday, July 2.
Seeking suggestions from the industry regarding reduction of the logistical costs of steel producers, junior steel minister Faggan Singh Kulaste said that the rising costs of steel production is a cause of concern for the Indian government.
The junior minister said that, in the context of India achieving steel production of 225 million mt by 2030, about 800-850 million mt of raw material will require transportation logistics and require huge infrastructure. Currently, every 250 km of transportation of iron ore material costs between INR 800-1000/mt via rail, he noted, adding that the cost stands in the range of INR 2,000-2,500/mt by road, in the range of INR 450-550/mt by waterways and in the range of INR 80-100/mt via slurry pipelines.
According to V R Sharma, managing director of Jindal Steel and Power Limited (JSPL), transportation of finished steel costs around INR 8,000/mt, which is a huge amount and adds about 28 percent to the factory cost of steel, with the customer having to bear this high cost. Port handling costs add another 10 percent and the steel ministry should target reducing the total logistic costs to around INR 4,000/mt, he stated.