Economy

‘Cutting iron ore prices is key to reviving forging industry’

Our Bureau Chennai | Updated on March 13, 2018

Drop in global inputs prices hits Indian steel industry



Reducing iron ore prices and removing mandatory Bureau of Indian Standards certification for steel imports can revive the Indian forging industry, according to S Muralishankar, Vice-President, Association of Indian Forging Industry.

Addressing media persons, Muralishankar said one of the major challenges faced by the industry is the disparity in the pricing of iron ore, an essential raw material for making steel.

Indian steel and its allied industries have been going through a rough patch for the past 18 months when the global prices of major input materials like scrap, coke and iron ore dropped by over 30 per cent. The drop in raw material prices was reflected in production of plain carbon steel used for forging industry that have come down to ₹27,000-₹30,000 per tonne internationally. But the rate has not fallen in India in part due to the stagnant iron ore price, which stands at ₹5,500 per tonne as opposed to ₹3,000 a tonne for imports.

Muralishankar said raw materials amount to 50 per cent of the total cost, denting profit margins. “In order to be competitive, we had to maintain our cost to match the international pricing level,” he added.

Vidyashankar Krishnan, Vice-Chairman and Managing Director, MM Forgings, said slashing iron ore prices to ₹2,500 per tonne, will not only bring down cost of steel but will also encourage more exports with better price points. “To facilitate this, a mechanism to ensure pricing transparency in line with global standards should be implemented,” he added.

Mandatory BIS certification has also impacted the industry as the exporters have to go through the process that takes an additional 3-4 months.

Krishnan said, “These steel mills are approved by their respective certifying agencies and do not want to go through the trouble of BIS certification since export to India is very small portion of their overall production,” he added.

Published on February 26, 2016

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