Indian Semi Finish Producers Curtail Production to Reduce Losses

Semi finish makers are now preferring to cut down production as prices in domestic market have hit rock bottom.

Prolong subdued demand and continuous fall in raw material prices have breached semi finish prices at an all time low levels, as per data maintained by SteelMint since Sept’10.

Manufacturers all across major markets stated that now they are running plants at 40-60% capacity. Sources from Durgapur – the 2^nd largest secondary producer hub in India, reported that more than 8 integrated units are going to halt production.

Besides, market participants in Mumbai mentioned plants were earlier running at 60% capacity, which now came down to 40-50% due to high inventory. Meanwhile, manufacturers in Raipur (CG), the largest secondary unit manufacturing hub, have cut down production to 70%.

Similar input is received from a pellet manufacturer, who said that 3 units in Raipur are going to hold production from 22 Oct’15 on account of maintenance, which will extend till 10 Nov’15.

A pellet manufacturer in Raipur, who have a plant with 1.2 MnT pa capacity quoted, “We will keep production on hold till 10 Nov’15. After resumption, we will only run plants, as per our requirement and not to sale in merchant market due to heavy loss.”  

Trade sources also confirmed that few pellet producers have suspended production till iron ore fines prices become liable.

“We will look to purchase pellet or iron ore from market rather than to produce it ”, shared a recently started pellet manufacturing plant in Raipur.

An official of a  integrated steel unit in Durgapur shared, “We are running our plants due to financial liability and also to incur variable cost. There is loss of over INR 1,500/MT in steel from raw material to finished products.”