Certain Indian steelmakers are looking to invoke the force majeure clause and also re-negotiate their short-term and long-term contracts with customers to combat the rising costs of raw materials.
Particularly, the price of coking coal has shot up due to thunderstorms and flooding in Australia, which is the largest exporter of the commodity.
The ongoing conflict between Russia and Ukraine has emerged as another key factor behind this issue. Moscow is one of the biggest suppliers of the product after Australia.
Steelmakers from Germany and UK have hiked prices of the commodity by nearly 25 per cent owing to the prevalent geopolitical situation.
“We have a policy not to apply force majeure. We will not hike prices, especially for MSMEs, given that domestic market prices are abnormally high. We have requested large customers to consider,” Jindal Steel and Power Limited (JSPL) managing director (MD) VR Sharma assured whilst speaking to the Economic Times (ET).
However, it is being speculated that unsustainable prices for both producers and customers could compel steel companies to undertake some production cuts for the time being.
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