The cost of imported raw material for secondary steel producers in the country rose owing to the recent sharp depreciation in the Indian currency.
Secondary steel producers import steel scrap and coking coal, besides other things. The exchange rate of rupee depreciated up to Rs 60 per dollar thereby raising the imported raw material cost of companies. Some reports indicate that the secondary steel units concentrated in Vidarbha, rely on imported scrap.
Owing to the increase in the raw material cost, some secondary steel firms have reportedly reduced capacity utilization. Secondary steel firms melt scrap for making end-products. Anyway during monsoon steel business is low owing to a lack of demand. The situation is worse this year, reports indicate.
Also, the depreciation currency raised the price of furnace oil, another commodity which goes into making steel. The price of furnace oil is not regulated by the government and hence the state-run oil marketing companies fix the price of the commodity based on the imported cost of crude oil.
A source in the local industry circles said that the rates of furnace oil have jumped by Rs 1,800 a metric tonne to touch Rs 43,000 in just a week. There are indications of a further rise soon. Every industry where heating is a part of the production process uses furnace oil.
President of Butibori Manufacturers Association Hemant Ambaselkar has reportedly said almost 100 trucks of furnace oil are consumed in Butibori industrial estate every week. Though many units have shifted to a mix of coal and furnace oil, it continues to remain a major component of fuel expenses.
Leave a Reply
You must be logged in to post a comment.