SteelMint has learned from market sources that many sponge manufacturers have reduced production and few others are planning to cut due to falling demand. Many standalone furnaces have closed down production post demonetization.
Mr Vijay Jhanwar, President, CGSIMA (Chhattisgarh Sponge Iron Manufacturers Association) stated, “The CG sponge industry is facing temporarily low demand. We are expecting the situation to improve from Feb-Mar’17 as government increases its rural housing and railway spending. In general plants have reduced production by 25-30% which will regain as liquidity and steel consumption increases”.
Chhattisgarh has 9 million ton sponge iron installed capacity with 22% share in total India’s installed capacity. Many integrated sponge manufacturer have curtailed production and are producing as per their requirement. Plants like Godawari Ispat, Bajrang Ispat, Sarda Energy, Vandana Global, and many other 100 TPD has reported limited production.
Similarly West Bengal Steel Industry Association president Mr Shankar Agrawal stated, “ After demonetization liquidity issue has crumbled all manufacturing industry. Presently in the State 35-40% production cut is already there, however situation is improving. We expect demand may normalize post Feb’17.” West Bengal has 4.5 – 5 million ton sponge iron installed capacity.
SteelMint also learned that a large manufacturer in Durgapur who produced sponge approx 1,400 MT/day, recent have reduce it by 50% and producing only 700 MT/day. He added currently production is only for own consumption & we are not selling in open market. Similar view was also received from 100 TPD sponge manufacturers.
In contrary Odisha, has not cut on its sponge iron production. But SteelMint learned there is logistic issue to supply in North-East & Western India. Due to high inventory manufacturers are planning to hold operations for a time being if such situation continues.
In South India, sponge price are higher compare to scrap prices and as per availability in the region. Currently scrap (HMS 80:20) prices in the Karnataka are prevailing at INR 13,700-14,000/MT, while Sponge (C-DRI, 80 FeM lump) offers within 14,500-15,000/MT ex-works (both prices are basic & ex-works). Thus, billet manufacturers in the region reported buying more scrap than sponge iron.
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