High steel prices hit engineering manufacturers

A sharp hike of 15 % in prices of steel in the last two months has hit the engineering sector, especially the Micro, Small and Medium-scale Enterprises (MSMEs).

President of the Coimbatore District Small Industries Association (CODISSIA) said production has dropped by 30 % in the Coimbatore MSME cluster. “On an average, steel constitutes almost 60 % of a component’s production cost. Coimbatore consumes over one million tonnes of steel annually. Hence, the impact is huge. The MSMEs are reluctant to take up new orders.” It is estimated that MSMEs in the country consume 8.3 million tonnes of steel. There are also additional duties on special steel products, he added.

Pankaj Chadha, chairman of EEPC India, said the total import duty on steel is close to 20 %. “There is a dramatic jump in steel prices – there were five hikes in the last two months. Shortage of scrap, which comes mainly from the west Asian countries, has hit the secondary steel makers and re-rollers. Their production has dropped 20 %. With demand outstripping supply, prices are shooting up. For the engineering sector, LPG and steel are major raw materials. With these prices at an all time high, the engineering sector is hit hard,” he said.

Mr. Chadha and Mr. Karthikeyan called for basic customs duty exemption for steel imports.