The Hindu Business Line : Rlys concerned over drop in steel cos’ input movement

What causes concern to the Railways is that even in 2007-08 the crude steel production by major steel producers decreased, marginally though, as compared to 2006-07.

Santanu Sanyal

Kolkata, July 22 The Indian Railways has taken up the issue of drop in the movement of raw materials with the major steel producers.

Iron ore loading in first quarter dropped by about 20 per cent; the hot metal production in some of the major steel plants too declined during the period.

In the first quarter, according to Joint Plant Committee sources, the hot metal production in SAIL plants dropped by 8 per cent and in Rashtriya Ispat Nigam Ltd’s Visakhapatnam plant by 7 per cent. While Tata Steel’s Jamshedpur plant posted more than 3 per cent growth in production, the overall production by major steel producers slumped by nearly 4 per cent during the period.

Slumping again

What causes concern to the Railways is that even in 2007-08 the crude steel production by major steel producers decreased, marginally though, as compared to 2006-07. In 2007-08, the total crude steel production of major producers was 22.10 million tonnes (mt) as compared to 22.17 mt in 2006-07.

While SAIL plants together posted marginal increase in production, Tata Steel’s Jamshedpur plant and RINL’s Visakhapatnam plant registered a drop in production during the period.

If the Railways achieved higher throughput with regard to raw materials movement for steel plants in 2007-08, it was because other steel producers, not the major producers, posted increase in production. Thus, Essar, Ispat and JSW, together produced 9.6 mt (8.4 mt ), and a large number of sponge iron units too contributed to higher production of crude steel at 22.2 mt (20.02 mt) during the year.

Supply constraints

But then the Railways cannot meet the entire iron ore demand of the sponge iron producers.

This is because most sponge iron producers concentrated in eastern region want ore delivered from three stations, —Jaruli, Banspani and Barbil, in Dongaposi iron ore belt in Orissa — because of the availability of better quality ore in the belt. However, these stations suffer from capacity constraints. Together these stations can load a maximum of 45 rakes a day, whereas the demand is four times as much.

The problem has been compounded by the Wagon Investment Scheme introduced by the Railways. The scheme’s customers, under the agreement, are entitled to priority allotment of rakes even though most of them are not steel producers. Most of its customers are either traders or exporters.

In South Eastern Railway, the major transporter of iron ore, there are approvals for 60 rakes under the scheme, of which 46 are in operation now, it is learnt.

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