Bengal’s secondary steel sector face raw material shortage

KOLKATA - The secondary steel sector in West Bengal, which churns a fifth of India’s total production of this commodity, is in a severe crisis following insecurity over supply of raw materials, especially iron ore.

“Lack of raw material like coal and iron ore is severely affecting the secondary steel sector in West Bengal. Producers are hugely dependent on mines outside as the state is bereft of iron ore,” said Santosh Bajaj of Merchants’ Chamber of Commerce.

“The mine owners are charging exhorbitant prices for iron ore, leading to the crisis in the secondary steel sector,” Bajaj, who is chairman of the chamber’s Iron and Steel planning Committee, told IANS.

Stating that only four-five coal blocks had been allotted to the state, Bajaj demanded that it be given iron ore mines and more coal blocks. The state’s units produce a total of eight to ten million tonnes of steel and depend mainly on Orissa for iron ore.

“Steel makers of Orissa have recently submitted a proposal to the Orissa government that 70 percent of iron ore production of the state be set aside for them,” he said, adding if the demand is unmet, about 120 units of West Bengal will face acute scarcity of ore.

“The market is also in a very critical state because of the 15 percent price hike due to rise in raw material prices.”

The units that can be categorised under the secondary steel segment include sponge iron, mini blast furnace, induction furnace and electric arc furnace, hot rolled units, cold rolled units and colour coated units.

Kolkata-based Shyam Steel director Lalit Beriwala said: “Secondary steel sector in West Bengal produces 20 percent of the country’s total, but the problem of iron ore is making the industry unviable in the state.”

Moreover, iron ore prices have also increased by up to 20 percent, not counting the sharp hikes in infrastructure, labour and electricity costs, he said.

Steel product prices went up 15 percent, but the sector was not reaping any benefit from it due to escalating manufacturing cost, which has reduced the profit margin, making the sector unviable, Beriwala lamented. But demand has not changed very much so far.

He suggested that there should be a long-term pricing policy for iron ore and the centre should ban its export, adding the next month’s national Budget should keep excise duty on steel intact and give emphasis on infrastructure projects to raise demand.

“Iron ore export is also hurting the secondary steel sector. It should be banned,” said R.K. Sharma, chief financial officer at Jai Balaji Group, a leading steelmaker. “We have informed the state government. Now they have to take a decision.”

(Mithun Dasgupta can be contacted at mithun.dasgupta22@gmail.com)