ET reported that Secondary steel producers are cutting back on output to cope with a demand slump. In the iron ore rich district of Ballari in Karnataka, at least eight plants that include secondary steel makers like BMM Ispat, Rayen Steel, PGM Ferro Steel and companies such as Mukand and Kalyani Steel primary suppliers to the auto sector have scaled back production. Subdued construction demand is also a trigger for such cutbacks. Mukand’s Hospet (Karnataka) facility has scaled back production by about 15-20% in the last three months. Inventories have increased substantially over normal levels. Kalyani Steels has had to cut production by as much as 40% over the same period, said a company official on the condition of anonymity.
Many producers ET spoke with said more cuts could be in the offing if demand does not improve.
Mr Deependra Kashiva, executive director at the Sponge Iron Manufacturers Association said that “Standalone plants producing sponge iron and pellets and with capacity less than 0.2 million tonnes have been badly affected. However, other plants like Tata Long Products and Godawari Power and Ispat that produce more of value-added products can survive the slowdown.”
Mr Ranjan Dhar, chief marketing officer at Essar Steel said that “Domestic demand has to improve as export opportunities are also shrinking. The industry will not be able to wait for more than one more quarter before deciding to take production cuts. Construction demand typically slows in the monsoon quarter, and this season has been among the rainiest, with at least nine states seeing repeated instances of flooding. According to an industry