JSW Steel Decided to Impose Surcharge on Steel Products

SEATTLE (Scrap Monster): Leading Indian steelmaker JSW Steel announced plans to levy a surcharge on steel products sold to its original equipment manufacturer (OEM) customers. It will be the first company to introduce surcharge on domestic sales. JSW Steel cited that inflated production costs on account of rising input costs, as the key reason for levying surcharge.

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According to Seshagiri Rao, Joint Managing Director and Group CFO, JSW Steel, the per tonne cost of steel production has surged higher significantly by almost 19% in the most recent quarter, upon comparison with the prior quarter. Also, the per tonne coking coal prices have skyrocketed by more than three times from $120 to $400 over the past month. There has been a substantial rise in thermal coal prices as well. The company has no other option to pass on a portion of the burden of rising production costs to its customers in the form of surcharge, he added.

The company said that there will be a base. If the raw material prices exceed the base, the surcharge will be calculated accordingly. It did not disclose the amount of surcharge, but said that it will be calculated proportionate to prevailing raw material prices.