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Steel companies slash production by 50% to cut mounting losses |
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administrator |
DATE |
2008-11-11 09:01:11 |
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Steel companies slash production by 50% to cut mounting losses
Nov 11, 2008
Hit by sluggish demand and declining prices, Punjab’s steel makers have slashed production by 50% to minimise their mounting losses.
“We have reduced our production capacity by 50% as the demand for steel and prices have dipped sharply,” North India Induction Furnace Association president K K Garg said on Monday.
Punjab’s steel industry, having a 20% share in the country’s secondary steel production, has a capacity of producing 8,000 million tonne per day.
“The steel industry received a major jolt, when the light engineering industry including bicycle, hand tools, forging, machine tools cut down their orders considerably in view of reduction in their export orders due to lack of demand in global market,” steel experts said.
Presently, the industry is just using its capacity to cater to the construction sector. “Since the prices of steel have come down to Rs 31,000 per million tonne from Rs 46,000 per million tonne, the construction sector is still placing orders for steel,” said Sanjiv Garg, owner of a Ludhiana-based firm. Falling steel ingot prices has also been another major factor forcing induction furnaces to cut down their production capacities, experts said.
Prices of ingots are hovering around Rs 27,500 per million tonne at present. Ingot rates have even touched the highest level of Rs 42,000 per million tonne this year and even dipped to the lowest mark of Rs 23,000 per million tonne. Sensing that steel prices would not improve in the near future, the induction furnaces and scrap importers have already canceled their steel scrap orders.
Besides, experts said, “because of the depreciation in rupee, the actual price to be paid by importers will go up which will further add to their burden.”
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