The Hindu Business Line : Steep hike in pig iron prices hits castings exporters

Talking to newspersons at the sidelines of an interactive session on ‘Post Foreign Trade Policy’ here today, Mr Rakesh Shah, chairman of Engineering Export Promotion Council, said castings exporters were facing rising prices and supply constraints with regard to supply of pig iron and foundry grade pig iron, the basic raw material.

He informed that castings exporters used to get regular supplies from the Burnpur factory of IISCO, “but with the merger of IISCO and SAIL, the former is now shifting to production of steel grade iron, causing heavy shortage of foundry grade iron. He said for the manufacturer-exporters already reeling under pressure of stronger rupee vis-À-vis dollar and increased freight rates, the hike in pig iron prices has come as another big blow.

He said although eastern India needs a certain quantity to feed its foundries, the pig iron manufacturers “in connivance with the traders”, were creating a shortage in the State while pig iron was being sold at cheaper rates in Punjab, Uttar Pradesh and other States and ‘even exported outside the country”. According to him, if the trend continues, units doing more than 2 lakh tonnes of castings exports annually are bound to face closure in the coming months.

The castings industry employs over one lakh people directly in West Bengal alone while another 2.5 lakh are associated through jobs and contracts, now jeopardised owing to this problem.

He appealed to the West Bengal government to step in and rescue the foundries in the region, especially exporters, by having SAIL/IISCO based in Burnpur dedicate one blast furnace for foundry grade pig iron as done before.

According to Mr R.P. Sehgal, the region chairman of EEPC, and managing director of Carnation Industries Ltd (a major sanitary castings exporter), pig iron prices in the last six months (May-Oct as on date) have shot up by 16.41 per cent to Rs 18,335 per tonne from Rs 15,750 per tonne in May.

The increase in the last one year has been to the extent of 24.72 per cent.

He said approximately 2 lakh tonnes of castings are exported annually, and exporters sourcing from private producers are becoming uncompetitive and losing out in the US, the main export destination for sanitary castings.

Mr Shah said the price hike was being done in a collective manner where all pig iron manufacturers including IISCO, Tata Steel in West Bengal and Kalinga and Nilachal Ispat in Orissa have been increasing prices in a steady manner. According to him, IISCO announced a sharp increase in pig iron prices on October 1, 2007 to Rs 18,335 per tonne from Rs 16,485 per tonne in September 2007, arguably the single largest increase by pig iron manufacturers in the last decade.

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