MUMBAI: Tata group chairman Ratan Tata has warned of economic slowdown and consumer demand due to rising steel prices. In his annual letter to the shareholders of Tata Steel, Mr Tata said the global steel industry is facing pressure on its margins due to rise in cost of iron ore and coking coal.

“The full impact of these cost increases on steel producers and the consequential higher steel prices to user industries will, however, be felt in the current year by which time one might expect some slowdown in economic activity and consumer demand,” he said. Mr Tata said that in the immediate future the steel prices will be dictated by the level of iron ore and coking coal prices which have been rising at “mind-boggling” rates of 85% and 300%, respectively.

“Unfortunately, most of the iron ore resources are controlled by three powerful international mining companies which control about 70% of global iron ore and other mineral resources, whereas the 10 largest steel companies combined would only account for about 28% of the total global steel output,” Mr Tata said. The chairman said that Tata Steel is self-sufficient in its current requirements of iron ore for its Jamshedpur operations but has sought mining leases to support its new plants in Orissa, Chhattisgarh and Jharkhand. The company will need to invest in or enter into contracts with mining companies to secure the availability of iron ore and coking coal for Corus operations in the UK and the Netherlands