The global steel industry, including India, is expected to face multiple market-related issues in the coming days as the escalating crisis in the Middle East impacts fuels cost that has lead to increased freight rates, according to BigMint Research.
Military tensions in the region are increasing as both Iran, and the US, along with Israel, continue to attack each other.
BigMint analysts said crude oil, LNG, and freight costs are rising simultaneously, transmitting cost pressure directly into steel and steel-related commodity markets.
From an average of USD 70 a barrel before the war, crude oil prices have risen to about USD 90/per barrel, an analyst said, adding that the cost is expected to continue to rise in the coming days.
War has also impacted freight cost, which jumped almost 40 per cent in recent times. In the absence of insurance cover, marine operators are also offering freight at non-negotiable prices as per the availability of the vessel.
On the impact of the US-Iran conflict on steel markets, including India, they said the industry would face sustained input cost inflation across coal, scrap and ore, with freight and energy reinforcing one another.
"The players are expected to pass on the increased cost to customers. However, if market is not ready to absorb the cost, steel demand can also be affected," an expert said.
Extended disruption could push prices of coking coal -- a key steel making raw material -- from major supplying markets such as Australia, Russia, and the US.
Increased input cost, coupled with higher freight cost, will also put pressure on the margins, the analysts added.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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