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Our Bureau

Chennai, April 23 Caught in a dilemma with copious orders on the one hand and the skyrocketing steel prices squeezing the margins on the other, the forging industry is at the cross-roads, according to the President of the Association of Indian Forging Industry (AIFI), Mr Vidyashankar Krishnan.

Addressing the media on the recent steel price increase, he said the current scenario threatens the very existence of forging companies as most of the users of forged components resort to imports, especially from China. The policy of China favours export of components while curbing steel and coke.

Barring a couple of vehicle manufacturers in the country others have not responded to the revision of prices, he said. This has not only wiped out margins but also became the death knell for the forging companies. The problem is worse in the case of exports as few global OEMs have terminated business with forge companies as their policies did not permit interim price revision.

The members of AIFI said one of the leading vehicle manufacturers in the country has placed an order for Rs 1,000 crore to procure components and aggregates including tyre, steering and rear axle systems.

Despite repeated pleas from several user industries including forging, the Government was only debating and has neither banned export of iron ore and steel or imposed export duty. Most of the forging units have exhausted the raw material inventory and are now facing imminent closure, they said.

In order to contain steel price increase, the representatives of AIFI suggest a ban on export of steel and iron ore or imposition of export duty to make exports unviable and correct the supply-demand mismatch in the domestic market. Similar measures have been taken by China, Taiwan, Korea and Japan.

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