High prices of iron-ore and pellets forcing small secondary steel units to close shops

Unprecedentedly high prices of iron-ore and pellet are compelling small secondary steel units in various states including West Bengal to down shutters or curtail production. In West Bengal, at least five such MSME units have closed down while 100-115 others curtailed production between 15 and 50 per cent, Steel Re-rolling Mills Association chairman Vivek Adukia said to the Press Trust of India.

“The secondary steel MSMEs are also surrendering power requirements from the DVC and the WBSEDCL (West Bengal State Electricity Distribution Company Limited),” Adukia told PTI.

In Bengal, about 500 units are engaged in sponge iron, rolling mills and steel making through the Induction Furnace route. All these units are suffering along with mills in other states in the wake of unprecedented iron ore, pellet prices due to unhindered export of the mineral.

The secondary steel associations of West Bengal, Odhisha, Madhya Pradesh, Chhattisgarh, Jharkhand, Karnataka, Maharashtra, Andhra Pradesh have jointly appealed to the Prime Minister and Steel Minister for their intervention and imposing export duty of 50 per cent on pellets.

The secondary steel makers had been pleading with their demand of export duty on pellets for the last one year without any effective measure from the government, Adukia said.

West Bengal Sponge Iron Manufacturers Association president Shankar Lal Agarwal said pellet price soared from Rs 4,500 per tonne in May 2020 to Rs 15,000 per tonne in June this year resulting in a cost impact on a ton of steel of Rs 20,800. The officials claimed that 50,000 secondary steel MSMEs have plunged into losses despite such high steel prices.

“The companies having their own pellet and iron-ore sources are making profits,” Adukia said. Pleading the government to make available raw materials for the domestic industry, Agarwal asked 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 open market.

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