The 172-member Steel Manufacturers’ Association of Maharashtra (SMAM) – an association of long steel producers – has written to the Union Minister for Road Transport & Highways (MoRTH) requesting the government to source steel for construction of large government infrastructure projects from MSME rebar producers.
The letter states that MSME producers in the western part of the country are running at only around 60% of productive capacity at present, as they are currently unable to supply steel for big government infra projects. This is a cause for concern, particularly at a time when rebar prices have breached the INR 50,000/t ceiling due to incessant hikes announced by primary producers amid supply crunch in the market.
A recent government notification allows small and mid-sized (IF route) players to supply rebars for government projects, with the rider that the billets for TMT production should be procured from large producers (integrated steel-makers). The Ministry of Road Transport & Highways issued a notification dated 28th Oct’20 regarding procurement of reinforcement bars to be used for plain, reinforced or pre-stressed concrete works on national highways.
The grade (IS: 1786) and other related parameters of the reinforcement bars are specified in Clause 1009.3.1 of the ministry’s specifications for road and bridge works. This Clause prescribes that the steel bars shall be procured from integrated manufacturers producing steel through the BF/BOF route. In case, these producers are “unable to supply the steel within the required time period” or in case they are not producing the TMT bars of required size and diameter, supply from secondary producers are allowed, provided these producers churn out rebars from “billets procured from original producers”, the notification states.
The SMAM letter argues that at a time of phenomenal upsurge in prices, the government exchequer could be relieved if steel is sourced from MSME producers who have upgraded technology in recent times to cater to quality of products to be used for government works.
SteelMint had spoken to senior sources in the Ministry of Steel (MoS) previously who had confirmed that the only consideration ought to be the grade specified and not the route of liquid steel production. Feedstock and/or steel-making process, as per MoS guidelines, are not to be taken into account, provided the grade-wise specifications for the product are satisfied.
The SMAM letter pleads, that subject to approval related to technical specifications, the government should consider buying materials from MSME producers. SMAM’s request to the government assumes special significance a time when infra projects are hitting a roadblock due to high steel prices.
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