Steel companies in the eastern
region are witnessing a sudden surge in demand from the South after a ban on
mining iron ore in Karnataka crippled steel capacities in that region.
Manufacturers of primary products
such as billets and sponge iron in the eastern region say though the rise in
demand from secondary steel companies in the South is temporary, it is slowing
bulging their order books.
Saket Agarwal, managing director,
MSPL, a Kolkata-based billet manufacturer, said, “It is difficult to quantify
the extent of additional demand coming from there, but of late we have seen
enquiries from Bangalore and Hyderabad where we did not service earlier.”
He said after Karnataka, most of
the steel and allied companies in India are located in the Orissa and West
Bengal and the cost to transport goods from East to South is not very high.
“No country can afford to keep a
booming industry banned for a long period of time and sooner or later, it will
be lifted. Till then we will continue to see some demand shift from South to
East,” Agarwal said.
“JSW Steel is currently sourcing
10,000 metric tonne of iron ore per day from Chhattisgarh and shelling out an
extra of Rs2 crore per day, but at least they are able to continue operations,” he said, adding that after the extension of the mining ban to Chitradurga and
Tumkoor regions, it is becoming very difficult for the company to even operate
at 80% utilisations levels.
Prakash Industries, a
Chhattisgarh-based sponge iron player, too, is seeing demand from the southern
region increasing.
“As a result of the ban in
Karnataka, a lot of demand for sponge iron is coming to North and adding to the
company's topline,” a Prakash Industries official said during a recent
conference call.
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