The production and exports of ferro alloys, the major ingredients of raw materials for steel making, are likely to decline by 25 per cent this year on poor demand from global consumer industries, according to experts.
The country produced about 2.36 million tonnes of ferro alloys last financial year, which is estimated to decline to 1.90 million tonnes this year, they said.
The year 2008-09 has brought a mixed bag of fortune for the ferro alloy producers. While their order books were full in the first half of the financial year, the next six months, especially since November, saw orders plunging to "nil" on the back of a near-halt in shipments to the US, Europe, Korea and Japan -- the four destinations where India exports almost 80-85 per cent of its ferro alloy output. The halt was triggered by the global economic meltdown.
Surprisingly, the demand resumed slightly in February, which indicates the revival in steel and stainless steel productions and thereby, in global economy.
During the four months’ slackening period — between November and February —, nearly 30 per cent of ferro alloys producers in India halved their capacity from the normal production level of 70 per cent to 35 per cent. The period also saw about 20 per cent of the existing 150 furnaces shutting down their shops.
But, the slump-hit manufacturers are slowly resuming their operations, said T S Sundaresan, Secretary General of Indian Ferro Alloy Producers’ Association (IFAPA).
Now, the scale of capacity utilisation has enhanced to an average 60 per cent from the level of 35 per cent in January, Sundaresan added. Last year, India exported about 9 lakh tonnes of ferro alloys, including ferro manganese, ferro chrome and silico manganese. This year, however, the shipment is estimated to decline because of the almost 30 per cent production cut announced by steel and stainless producers in Europe. In a major development, another raw material-rich country, China, has levied a 20 per cent export tariff on most ferro alloys, with the exception of ferro-silicon (25 per cent) and 75 per cent min grade ferro-vanadium (0 per cent). This is likely to create a good opportunity for Indian ferro alloys exporters to tap markets in Europe, Korea, the US and a host of other countries at competitive price. China exported a total of 3,026,322 tonnes of ferro-alloys in 2008, down 5.71 per cent from 2007, with ferro-silicon (down 17.22 per cent), silico-manganese (12.28 per cent), ferro-molybdenum (72.44 per cent), ferro-tungsten (27.06 per cent) and ferro-titanium (71.46 per cent) having the biggest decreases on a year-on-year basis. In January, China’s exports of ferro-alloys slumped 68.7 per cent to 89,809 tonnes versus 286,237 tonnes in the same month of 2007. Meanwhile, IFAPA has urged the government to raise export duty to 10 per cent from the existing 5 per cent or ban exports of ferro alloys completely.
Source : Business Standard