Indian secondary Induction operators reeling under low conversion spread. Manufacturers in Central, East & South India who are largely melts sponge iron are running their units below capacity.
India produces 30-32 million tonne steel from IF/EAF (Induction furnace, Electric arc furnace) route in total production of 90 million tonne in FY16.
SteelMint in the data analyzing noticed that conversion spread in Raipur & Rourkela hit lowest since 2012. In Raipur the low spread were reported in Oct’16 at INR 7,000/MT and during Aug’16 in Rourkela at INR 8,050/MT which was all time low since Jan’12. However, in Durgapur It was recorded at INR 7,250/MT in Aug’16, which is low since Apr’13.
Note: The conversion spread represents the speculative cost of production and margins. If the conversion spread is above industry average then the price of the products is higher than the input cost (including miscellaneous, raw material cost and power cost) and the spread is profitable. If the spread is lower than industry average then the products are priced at less than the input cost and are not profitable.
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