Sponge iron manufacturers of Odisha are unable to utilise their capacity due to muted demand from primary and secondary steel makers. A majority of the units in the state are running with less than 60 per cent of their capacity. The state with an installed capacity of over 2 million tonnes per annum is currently producing around 20,000 tonnes.
With no official data available and the Odisha Sponge Iron Manufacturers Association defunct, a clear picture on the demand and production is not available.
Industry sources said that relaxation in lockdown and classification of steel and its raw materials as essential goods by the Government has improved the situation to a great extent. However, the key challenge faced by the secondary steel manufacturers is labour shortage.
Of the 104 sponge iron manufacturing units in the State, some units are closed due to financial problem. Around 45 units are located in Sundargarh district while other units are at Jharsuguda, Sambalpur and Keonjhar districts.
Chhattisgarh having a large number of foundries with induction furnace is the major market for sponge iron. The state also supplies sponge iron to several northern states. Uttar Pradesh is another big market.
Large scale reverse migration, low demand for steel in the construction business and liquidity crunch have hit the secondary steel manufacturers hard. It is a similar situation for pellet manufacturers as well.
At present, sponge iron is about Rs 20,000 per tonne for higher Fe grade while the lower grade is of Rs 14,000 per tonne. Sponge iron which is made by directly reducing iron ore is mostly done in coal based units in the state because coal is cheaper than gas.