Baffled by rising coal and pig iron prices, sponge iron and steel plants in Raipur, Chhattisgarh are seeking relief from Sanjay Kumar Singh, Secretary, Ministry of Steel. Due to power outages and high price volatility in raw materials, around 8-10 standalone rolling mills in the state have been temporarily shut down so far this year.
Sumit Deb Chairman-Cum-Managing Director (NMDC), Anirban Dasgupta, Director In-Charge (SAIL-Bhilai Steel Plant), and various officials and association members were also present in this meeting.
The association requested the following reliefs: –
1. Higher electricity tariffs: Around 8-10 standalone rolling mills have been closed this year as they have to pay electricity charges higher by INR 3-4 per unit compared to large steel plants. This situation forced them to work only at 50-60% capacity. Usually, standalone rolling mills operate at around 20-50% load factor. However, large rolling mills operating at 51-74% receive a discount of 25%, which is around INR 1.5 per unit load factor incentive. Those standalone rolling mills operating at less than 50% load factor are not able to take load factor incentive.
Chhattisgarh Steel Re-Rollers Association (CSRA) asked the steel secretary to create a separate tariff category for standalone rolling mills that are operating at less than 50% load factor, so that they can also take the advantage of load factor incentives like large steel plants. A significant difference of INR 3-4 per unit in power rates is the reason behind the closure of many standalone rolling mills and several others are on the verge of closure. Association members sought: –
- a separate tariff category for standalone rolling mills that are operating at less than 50% load factor.
- standalone rolling mills’ tariff should be at par with tariff rates of large steel plants at INR 5.5 per unit.
- standalone rolling mills’ demand charge should be reduced to 100 per KVA from the existing 190 per KVA.
- Electricity charges should also be reduced to 3% from the present 6%.
2. Availability of coal from CIL at reasonable rates: Subsidiaries of CIL have stopped supplying coal to private agencies from 3 March 2022. The members of CSRA require around 3 lakh tonnes of coal per year to keep the plant operational. To overcome the problem of coal shortage, the association requested the steel secretary to help in arranging coal supplies from South Eastern Coalfields (SECL) at reasonable rates.
3. Iron ore prices volatility: In order to avoid high price volatility in the sector, Chhattisgarh-based sponge players have requested for a more reasonable pricing of NMDC’s iron ore lump and a quarterly pricing to avoid the price fluctuations.
4. Proposal to PSUs to supply 60,000-75,000 t of billets monthly: In Chhattisgarh, there are around a total of 200 rolling mills plants and secondary steel makers that produce as much steel as primary steelmakers do. The association requested the steel secretary to help in arranging supply around 60,000-75,000 t of billets from the country’s largest iron-ore producer NMDC’s Nagarnar Iron and Steel Plant and SAIL’s Bhilai Steel Plant.
5. Separate auction of local scrap for state-based units: Amidst tight availability of local scrap, rolling mills have requested SAIL BSP to organise a separate auction for scrap and re-rollable materials. Also, mills have requested the PSU to grant some preference for pig iron supplies as well, which has seen a sharp price surge amidst high priced export deals. They have also suggested for setting up of atleast 2 scrapping units in Chhattisgarh and scrap generated by SAIL BSP must be made exclusively available for local steel units through auctions.
6. Lowering of EMD amount in SAIL BSP auctions: To participate in BSP’s forward auction permeant EMD fee has been increased to INR 10 lakhs (previously it was INR 2 lakhs) which is very high for the association members and the association requested the steel secretary to reduce it back to INR 2 lakhs.
India’s long steel capacity was recorded around 103 mn t in FY21, out of which the share of Chhattisgarh was around 21%, as per SteelMint’s analysis.
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