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Rising gas prices hurting Essar Steel – Report

Steel News - Published on Mon, 20 Nov 2017

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Business Standard reported that the global rise in natural gas prices, coupled with a bullish outlook for the commodity, is causing worry among select domestic steel, with capacity utilisation dropping. The Ruias owned Essar Steel is seeing dwindling utilisation amid rising gas prices. The company has a 10 million tonne annual capacity, of which 70 percent is gas-based; it relies largely on imported gas, whose landed cost for Essar has risen to USD 10.16 per mBtu, from USD 7.4 per mBtu in June. A source told Business Standard that “This three-dollar rise translates into an additional cost of INR 2,500 a tonne of steel making.”

While company officials declined to comment, they said volatility in gas prices was a challenge.

Globally, natural gas prices have been on a rise due to coming winter demand amid a 5.5% drop in US natural gas inventories over last year. Experts say after exceptionally low average prices in 2015 and 2016, these are likely to rise both in 2017 and 2018. The price in the US market is currently USD 3.09 per mBtu, up almost 20% from USD 2.56 per mBtu in February, after a peak of USD 3.44 per mBtu in May.

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Posted By : Nanda Koijam on Mon, 20 Nov 2017
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