India's Tata Steel expects hardening raw material prices could inflate its cost of production in Europe by $140-$150 per tonne,and hit operating margins in fiscal 2011,a top official said on Monday. Since we source entire raw materials for our European operation from outside,the impact of increasing raw material prices for FY11 could go up,which is a major concern going ahead,Managing Director H. M. Nerurkar told reporters. Tata Steel's European operations include Corus,the continent's second-largest steelmaker,which accounts for about two-thirds its global capacity of about 30 million tonnes. Indian operations of the world's eighth-largest steelmaker account for another quarter of the capacity. Currently we are negotiating with the miners. The indications are clear that iron ore prices could go up by 70-80 percent in the current quarter from $65 a tonne to $110 a tonne. Similarly,coking coal prices are expected to touch $220 a tonne from $125 a tonne,he added. However,cost impact is expected to be much lower for Tata Steel's Indian operations,as the entire iron ore requirement and 45 percent of total coking coal requirement are met through captive units. The steelmaker expects demand for steel in India to rise by 10-12 percent in 2010/11,led by automotive and construction sectors,Nerurkar said. The company's saleable steel production in India is expected to reach 6.9 million tonnes in 2010/11,as against 6.4 million tonnes during FY10,he added. With our new capacities coming up,we should be producing 10 million tonnes in India by 2012/13,Nerurkar said.
