A steel producers' body has written to Prime Minister Narendra Modi, explaining that the metal price hike was due to surging raw material costs, and demanded a ban on iron ore export for six months, an official said on Tuesday.

The Indian Steel Association informed the PMO about the price increase of the metal after Union Road Transport and Highways Minister Nitin Gadkari wrote a letter to the prime minister on the impact of rising steel prices on infrastructure projects.

"We would like to highlight some of the very serious and compelling reasons which have left the steel industry with no recourse, but to raise prices of steel from time to time," the ISA said in its letter to the PMO.

Hot-rolled coil prices have increased by 46 percent to Rs 52,000 per tonne in November as compared to Rs 37,400 per tonne in July this year. Rebar TMT, which is used in the housing and construction sectors, had touched Rs 50,000 a tonne, industry sources said.

The ISA mentioned the issues related to iron ore, price rise of raw materials, shortage in global steel supply and lower capacity utilisation due to COVID-induced disruptions.

The steelmakers' body demanded a temporary ban on iron ore exports till the supply side stabilises for the key raw material.

"Due to a temporary shortage of steel in the wake of the COVID-19 disruptions, the international prices surged to over USD 750 per tonne from the bottom of USD 397 per tonne witnessed this year. As India is an open economy, the steel prices in the country move up with the global prices," ISA secretary-general Bhaskar Chatterjee said.

He also mentioned that the iron ore price has increased more than double from Rs 1,960 to Rs 4,160 per tonne in the period of June-December 2020.

"With an increase of Rs 1,000 in iron ore prices, the minimum impact is Rs 2,000 per tonne in steelmaking," Chatterjee said.

Iron ore production in the April-October period of 2020 was at 92.08 million tonne, registering sharp degrowth of 30 percent over the same period last year.

On the other hand, iron ore exports had surged by 70.3 percent to 29.2 million tonne in the first half of the current fiscal.

Explaining why the metal price has been raised, the ISA said Indian crude steel production fell by 19 percent in the current financial year.

"Indian steel industry faced severe disruptions in production caused by the unprecedented COVID-19 pandemic. Consequently, many steel companies in India with sub-optimal operating capacity showed substantial cash losses due to non- absorption of huge fixed costs for the quarter ended June 2020," it added.