Rising prices for iron ore affected the production of secondary steel

Unprecedented high prices for iron ore and pellets are forcing small secondary steelmakers (non-blast furnaces) in India to close or reduce steel production. In West Bengal (WB), five micro, small and medium-sized enterprises (MSMEs) have cut production by 15-50%, according to the Rolling Mills Association (SRMA).

Pellet prices increased from INR 4,500 per tonne (USD 60.35 per tonne) in May 2020 to INR 15,000 per tonne (USD 201.13 per tonne) in June 2021, resulting in lower costs for finished steel production at INR 20,800 per tonne. Despite such high steel prices, 50,000 MSME secondary steel suffered losses.

“Steelmakers working on the induction furnace circuit are also ditching electricity from DVC and WBSEDCL (West Bengal State Electricity Distribution Company Limited),” says SRMA chairman Vivek Adukia.

Various steel associations from steel-producing countries have asked the prime minister’s office and the ministry to impose a 50 percent duty on the export of iron ore and pellets over the past year, but no action has been taken so far, Adukia adds.

Companies with their own mines and pellets are making a profit, but other small manufacturing plants are struggling to keep up with the demand for raw materials. Following unprecedented iron ore prices, associations are also pleading with the ministry to allow a consortium of small businesses (up to 5 members per consortium) to participate in auctions, which will help reduce dependence on the open market.

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