Raw material prices a cause of concern for industries in Tamil Nadu

The ongoing Iran conflict has begun to impact industrial supply chains, leading to a shortage of key raw materials and a steady rise in input costs over the past few days.

With global logistics disruptions and volatility in energy-linked commodities, industries across Tamil Nadu are worried about sustaining production and maintaining business operations.

On Wednesday, industry associations, heads of chambers of commerce, and key companies met officials from the State government and expressed their concerns.

“Copper price has risen significantly. Earlier, it was selling at ₹800–₹900, depending on the quality, but it is now priced between ₹1,300 and ₹1,450. The new challenge we are facing is sourcing steel and aluminium scrap, used for melting and reconversion into components. These materials are sourced from the Middle East (West Asia),” said R.V. Chari, chairman, CII Chennai zone, and Managing Director, GH Induction Limited.

R. Vasudevan, president of Tamil Nadu Small and Tiny Industries’ Association, said: “Approximately 2.5 lakh small and micro industries are dependent on LPG for their operations. The shortage has impacted businesses such as container assembling, auto ancillary units, ship building repair, and engineering steel structures.”

The match box manufacturing industry has also taken a hit. While 1 kg of paraffin wax imported from Iran was sold at ₹80 earlier, the price is now ₹120. The price of sulphur has increased from ₹29 to ₹68 a kg. Packing material now costs ₹200 a kg, up from ₹120 a kg two weeks ago.

“We are getting the raw materials from Thoothukudi, Sivakasi, and Virudhunagar-based stockists, and we are buying them at inflated prices. We have no other suppliers here. The stocks they have may last another 10 days. Once these are exhausted, we would be forced to close down the factories,” said M. Paramasivam, president of National Small Match Manufacturers’ Association, Kovilpatti.

Ancillary units

The ancillary units of Bharat Heavy Electricals Limited (BHEL) in Tiruchi have also begun to feel the pinch. According to sources, around 250 units, classified as Micro, Small and Medium Enterprises (MSMEs), use zinc, copper, and steel as raw materials for making key components for high-pressure boilers. The price of a tonne of steel, which was ₹52,000 a month ago, has increased to ₹55,000. The price of a tonne of copper, which was ₹1.40 lakh two weeks ago, has gone up to ₹1.70 lakh. “The increase of ₹30,000 per tonne of copper is huge. It will have a severe impact on the ancillary units in executing orders for BHEL,” said N. Kanagasabapathi, who operates an MSME unit in Tiruchi.

MSMEs in the engineering sector, numbering more than a lakh in Coimbatore district, are concerned over the rising input costs for the last two days. “The prices of most of the refinery-related products are on the rise,” said P. Ponram, treasurer of the Coimbatore District Small Industries’ Association. “The prices of raw materials such as steel usually go up during the summer months. This year, with the war continuing in west Asia, there is panic buying by the MSMEs. Those who usually store raw materials for a week are trying to store them for a month. The prices of all petroleum-based products are up,” he said.

According to R. Ramamurthy, former president of the Association, the prices were manageable till last week. For the last two-three days, the prices of all consumables have also gone up. “There is 50 % – 100 % increase. We will not be able to recover these costs from the customers,” he said. With commercial LPG supply discontinued, all gas-cutting activities have come to a standstill. The prices of sprays, paints, grease, and even packaging materials have shot up, he added.

(With inputs from Sangeetha Kandavel in Chennai, M. Soundariya Preetha from Coimbatore, C.Jaisankar from Tiruchi and P. Sudhakar from Tirunelveli)

Published – March 12, 2026 12:22 am IST