The Hindu Business Line : Zinc users seek price regulatory panel

Consumer woes

Domestic producers have their own mines and there has been no volatility in their input costs.
High zinc prices have resulted in consumers cutting offtake and changing preference.
Shift to more thinner zinc-less products.

New Delhi , June 19

Indian zinc consumers have sought the intervention of the Prime Minister and the Minister of Mines in controlling spiralling zinc prices and to set up a regulatory commission for this purpose to keep prices under control.

The move comes in the wake of the more than 300 per cent increase in zinc prices since August last year.

Fully controlled

Zinc production in India is fully controlled by the private sector with only two producers - the Sterlite Group-controlled Hindustan Zinc Ltd and Binani Zinc Ltd.

The user industry comprises manufacturers of galvanised and coated steel sheets, pipes and tubes, steel wires and structurals.

The Federation of Industries of India, representing most of the companies in these sectors, in a letter to the Prime Minister, Dr Manmohan Singh, has urged the Union Government to take "suitable steps to control zinc prices."

EXEMPT FROM EXCISE

It has demanded that domestic zinc prices should not be linked with the London Metal Exchange (LME) prices, the existing 10 per cent import duty should be waived, and exemption be given from the 15 per cent excise duty.

Besides, "the Government should set up a regulatory commission which should regulate zinc prices." Arguing for Centre's intervention, the Secretary-General, Mr H.L. Bhardwaj, told Business Line: "The domestic companies have their own captive mines and all raw materials are indigenously available and there had been no matching volatility in these input costs.

The Government must step in because without any corresponding increase in production cost these companies are continuing to increase prices."

According to Mr Ankit Minglani, Director of Uttam Galva Ltd, one of the largest domestic users of zinc - consuming over 2,000 tonnes every month - there is a clear change in customer preference and consumption of zinc is gradually decreasing.

"Customers who were earlier using 180 g zinc coating per sq m are now ordering 120 gm or below and those using 120 gm are placing orders for 90 gm or less. And this includes high-end European customers too."

The general shift is from the thinner more-zinc-less-steel products to the thicker less-zinc-more-steel products because thinner materials consume more zinc per tonne because of larger surface areas. But use of less zinc would certainly reduce the longevity of these products, he added.

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