Mini
steel plants in Chhattisgarh are facing a threat of closure due to the ongoing financial
& raw material crisis. Most of the plants are running at lower capacities. Plants
are running only for 6 hours instead of 24 hours in a day and lower production
levels have reduced the supply of finished products in the market.
Rolling
mills are unable to get M Guard at sufficient quantities i.e. an important
ingredient to manufacture finished products like TMT, Angle, etc. So, it has made
TMT and other construction material expensive.
35
more mini plants are likely to shut down their operations and most of the plant
owners are tensed over the present production situation.
Key Factors affecting the steel market
are as follows:
Higher Power tariff- The main reason behind this closure of plants is higher power tariffs. Plants
owner have to pay the fixed demand fee of Rs 12 Lacs whether they produce or
not. There is increment of more than 50% in electricity charges every year that
has pushed up the steel prices too.
Expensive Scrap- Ferrous scrap was sold at Rs 10,000/MT once upon a time which is now sold at
around Rs 30,000/MT currently (the increased is noticed juts within 2 year),
leading to rise in production cost. Bringing imported scrap to Chhattisgarh is also not feasible as it is situated away from sea ports and the freight cost would
be high. So, this is also one of the reasons behind the rise in local ferrous scrap
prices.
“30
mini steel plants have been closed and trader's money has been blocked. Production has been reduced to less than 50%
in over 100 more plants. So, prices are moving northwards. Govt are charging
full electricity fee even at half production capacity. In this case, plants
owners are facing problems to make the payments. It is likely to hurt the steel
manufacturers and other business until or unless the state Govt provides some
good relief package”, said Mr. Ashok Surana, President, Mini Steel Plant
Association.
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