Financial Daily from THE HINDU group of publications
Wednesday, Sep 03, 2003
Financial Daily from THE HINDU group of publications Wednesday, Sep 03, 2003 |
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Industry & Economy
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Bearings, Castings & Forgings Castings export from eastern region suffers — Foundries hit by steep hike in prices Our Bureau
Kolkata , Sept. 2 ENGINEERING exporters in the eastern region, mainly of castings, to the US and other countries, and also the foundry sector, have been severely hit by the steep hike in prices of foundry-grade pig iron in the last few months from Rs 11,800 per tonne in April 2003 to Rs 13,500/Rs 14,000 per tonne by the end of August 2003. Many units are already on the verge of closure, jeopardising the employment of lakhs of workers. According to leading exporters of engineering items, some Rs 500-crore worth of exports was being jeopardised, as orders were not being taken from early August. A major problem seems to be that most of the producers are selling their capacities to only traders, and not directly to consumers. The base price last year was in the range of Rs 7,000 per tonne, and is currently prevailing at Rs 10,500 per tonne, an increase of 50 per cent, and poised to increase further by another Rs 1,000 per tonne in the next one week. The Engineering Export Promotion Council (EEPC) has urged the Union Steel Ministry to intervene without any further delay and save the foundry industry in the region from getting totally wiped out. It is stated that if pig iron prices are not restored to a level of around Rs 9,000-9,500 per tonne, many export units as well as foundries may be forced to down shutters, rendering over 10 lakh people directly or indirectly connected jobless. Prices of pig iron in Coimbatore and Baroda are said to be 10 per cent to 15 per cent cheaper than in Howrah, West Bengal. Indian Iron and Steel Co (IISCO), Tata Metaliks, Kajaria Iron Ltd, Kalinga Iron (Orissa), NECO (Chhattisgarh) and Nilachal Ispat are the prime suppliers of pig iron to foundries. Briefing presspersons here on the seriousness of the situation, Mr R.P. Sehgal, Chairman of Engineering Export Promotion Council (EEPC), eastern region, said the problem had been caused by a manufacturer-trader nexus, under which the two major producers such as IISCO and Tata Metaliks had decided to deal only with traders to manipulate prices and availability of foundry-grade pig iron. He alleged that private manufacturers of pig iron would meet every month to finalise the hike in prices, and these were effected in tandem, and in the same range, violating the provisions of MRTP Act. He said IISCO would not sell pig iron directly to manufacturer (foundries) or exporter, thus rendering prices still dearer and subjected to the whims of the trade, which would also get a discount on bulk orders. Traders, in turn, create an artificial scarcity by selling pig iron to the northern region (allegedly in a clandestine manner by road), and also assist in exports to Bangladesh at ridiculously low prices compared to domestic rates. Asked why imports cannot be undertaken, especially when the dollar value was now down, he said China, Russia and several other countries had banned/imposed a duty on pig iron export in order to protect domestic foundries, and were also benefited by the value addition by way of castings exports. Mr Sehgal rejected the contention of pig iron manufacturers that price increases had been warranted by the increase in prices of low ash metallurgical (LAM) coke imported from China, and also that of iron ore. "Most producers import coal and convert it into coke on Indian soil, and coal prices have not increased by more than 10 per cent, which meant an impact of less than five per cent on the final price of pig iron, as it is fully neutralised by the fall in value of dollar for imports." He said there was no import of LAM coke in the recent past. Pointing out that iron ore was now being exported out of India to China at a price of $ 30 to $35 per tonne, of which the freight element alone was close to 60 per cent, Mr Sehgal asked why allow export if domestic users of iron ore at such a disadvantage? Why is export being permitted at ridiculously low prices? The EEPC Chairman said the eastern region needed approximately 15,000 tonnes per month of foundry-grade pig iron for castings manufacture for export, and another 20,000 tonnes for other domestic usages.
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