State-run iron ore miner NMDC's decision to increase ore prices by 10% has put the steel industry in a corner, most of whom were expected to announce price increases over the next few days.

NMDC has said the prices of iron ore lumps have been increased by 10 % and fines by about 8% ranging from Rs 250 to Rs 400 per tonne. Higher grade ore lumps with 65% iron content are now priced at Rs 5,400 a tonne, while the fines with 64% iron are priced at Rs 2,800. Iron ore is a key raw material for steel production. Nearly 1.6 million tonnes of iron ore is needed to produce 1 million tonnes of finished steel. "A Rs 500 per tonne increase in ore prices will result in Rs 1000 per tonne increase in costs for a steel maker. We are reviewing the prices at the moment and will take a call on the quantum of price increase in a couple of days," an Essar Steel official said.

Steel Authority of India Limited - which has access to captive mines - may not be hit by NMDC's move. "We have captive mines and therefore there is no impact on us because of this," a SAIL official said.