High iron ore and pellet prices force small secondary steel units to close stores, Auto News, ET Auto
Calcutta: Unprecedented iron ore and pellet prices are forcing small secondary steel units in various states, including West Bengal, to shut down or cut production, officials said on Sunday. In West Bengal, at least five of those MSME units have closed while another 100 to 115 have cut production by 15 to 50 percent, Steel Re-rolling Mills Association chairman Vivek Adukia said.
“Secondary steel MSMEs are also waiving the power requirements of DVC and WBSEDCL (West Bengal State Electricity Distribution Company Limited),” Adukia said.
In Bengal, about 500 units are engaged in sponge iron, rolling mills and steelmaking through induction furnace. All of these units, along with factories in other states, are suffering from unprecedented iron ore prices, pellet prices due to the unhindered export of the ore.
The secondary steel associations of West Bengal, Odhisha, Madhya Pradesh, Chhattisgarh, Jharkhand, Karnataka, Maharashtra and Andhra Pradesh jointly asked the Prime Minister and the Minister of Steel for their intervention and the imposition of a 50 percent export duty on pellets.
Secondary steelmakers have argued their demand for pellet export duties for a year without any effective action from the government, Adukia said.
West Bengal Sponge Iron Manufacturers Association President Shankar Lal Agarwal said the price of pellets rose from Rs 4,500 per tonne in May 2020 to Rs 15,000 per tonne in June of this year, impacting costs a ton of steel of 20,800 Rs.
Officials claimed that 50,000 secondary steel MSMEs plunged into losses despite such high steel prices.
“Companies with their own sources of pellets and iron ore are making a profit,” Adukia said.
Advocating the government to make raw materials available for domestic industry, Agarwal called on the government to allow a consortium of smaller units (up to 5 members per consortium) to bid in auctions that will help reduce dependence on the free market.