The Hindu Business Line : Kerala reeling under steel shortage

“In spite of the increase in demand in the State besides being a profitable market, the volume of supply has been cut by about 80 per cent of late.”

G.K. Nair

Kochi, Sept. 21 Sharp fall in the supply of good quality steel by the Vizag Steel plant to the State during the past two months has allegedly pushed up sales in the black market, besides depriving the State of substantial sum towards sales tax.

The operator of the only steel yard in the State for the Vizag steel in Kalamassery told Business Line that he used to receive 10,000 tonnes of steel every month in the past. But it has dropped sharply to 2,000 tonnes in August, and this month also so far only 2,000 tonnes has been received.

Up to the 20th of every month three rakes used to arrive at the yard and by end of the month it used to go up to 4-5 rakes. The arrival at present is only one rake, he said.

Internal consumption at the steel plant which is under expansion is pointed out as the reason for the reduction in supply. However, the yard operator said that Kerala was one among the first eight markets having high profitability for the steel plant and hence supply to the profitability area should not have been cut down. The operator said that in Kerala, steel was used mainly in the construction sector, which is booming in recent years, and the monthly demand has shot up to around 35,000 tonnes.

Surprisingly, in spite of the increase in demand in the State besides being a profitable market, the volume of supply has not been increased so far, and instead the supply has been cut by about 80 per cent of late, he alleged.

In fact, the supply last year was less by seven to nine per cent from that of the previous year. Short supply of the quality product has increased sales of re-rolled materials by secondary producers. It has also promoted black marketing by bringing in quality steel from yards located outside the State, he said. In the black market, it is said to be sold at Rs 2,000–Rs 3,000 more than that of the actual selling price of the product at the steel yard. More over, the fall in supply deprives the State of about Rs 10 crore towards sales tax a year. Increased supply would push up the sales tax revenue also, he said.

According to him, the State Government needs to put pressure on the Union Steel Ministry to raise the supply of high quality steel from the Vizag plant to the State considering the increasing demand. He urged the Government to initiate steps to get a full siding for smooth transportation of steel to the yard.