Raigarh based induction furnaces are likely to face closure from 09 Oct, 2014 against penalty notice issued by Jindal Power for non-payment of cess charges, which is about INR 1.5 crore per furnace, accumulating since 2006-2007.
Raigarh based induction furnaces installed with O P Jindal industrial park in Raigarh, Chhattisgarh confirmed that they have received notice from Jindal Steel, which is the sole source for power to these units, to clear the dues otherwise power supply will be withdrawn after 09 Oct, 2014.
There are almost 26 induction furnaces and 4 arc furnaces, which produces about 2,500 MT per day or 75,000 MT Ingot/Billet per month, which will be affected.
“We have received notice from Jindal Steel & Power, but we have decided not to clear as these charges are unjustified. Company has imposed on an average of INR 1.5 crore cess (including interest & principal) on every furnace based on capacity and utilization,” said a induction furnace owner based in Raigarh.
Market participants expect that if production stops in Raigarh, Ingot/Billet prices may rise in North India as Raigarh is a major source of supply for rolling mills based in UP and Punjab.
Current offers for commercial Ingot is at INR 30,300/MT (ex-Raigarh) on regular payment basis and commercial Billet at INR 30,100-30,200/MT (ex-Raigarh) on advance payment basis. Meanwhile, Sponge iron (C-DRI) is being offered at INR 21,300/MT (ex-Raigarh) and Pellet sponge (P-DRI) offers are hovering in the range of INR 19,100-19,300/MT (ex- Raigarh).
In future prospect, closure may lead to fall in Sponge iron prices in the local market.
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