Weakening rupee against US dollar
has come as a severe blow to Punjab's secondary steel market, with
industry cutting down output by whopping 30 per cent in the wake of rising cost
of imported raw material.
Apart from this, some of scrap
importers are not even taking delivery of their import consignments, fearing of
higher payments. Sellers have also cut their offers for HMS Scrap import prices
to attract Indian importers into the market. Prices has eased by US$ 5-10/MT
Steel makers including induction
furnaces in Punjab have cut down their output by up to 25-30 per cent because
of rising US dollar against Indian currency as they will have shell out more on
importing scrap.
Steel producers meet 95 per cent
of their requirement by importing HMS i.e. high melting scrap from several
countries including the UK, Dubai and Africa for making steel ingot. Punjab has
about 200 induction furnaces with daily production capacity of 10,000 tonne per
day.
Rupee, which dropped to two year
low, is hovering over Rs 49 per US dollar and the import cost per tonne of
scrap has shot up by Rs 2,500/MT, resulting into squeezing margin of furnace
owners in light of suppressed demand for iron and steel.
“How can we afford to meet
the additional cost of import (Rs 2,500 per tonne) caused by depreciating rupee
as margin in furnace are wafer thin,” said Amarjit Goyal Chairman of
Modern Steel Limited based Mandi Gobindgarh.
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