A sudden increase in steel prices by local steel manufacturers today came as a shock to steel-consuming industries. Stepping on the toes of large-scale producers, local manufacturers effected an increase of Rs 700-1,000 per tonne. The decision will impact industries like cycles, cycle parts, auto parts and light engineering, which fear they may lose orders. |
"Rapid fluctuations in steel rates have been giving industry a tough time, particularly to small- and medium-scale units, which rely on short-term orders. Today's increase will lead to losses as finished products need to be supplied at the previous rate," said Varinder Kapoor, general secretary, United Cycle and Parts Manufacturers Association. |
|
Industrialists said raw material formed more than 60 per cent of the input cost and the increase had a direct bearing on the cost of production. A unit that procures orders at a certain price will either lose that order or incur losses when such an increase happens. |
|
"In the past one year only, there has been an increase of almost Rs 5,000 per tonne in the price of HR coils. Prices of flats too have been on the rise. Despite the fact that there is no increase in global rates, they are increasing their prices. Following them, local producers too increased rates," said P D Sharma, president (Punjab), Apex Chamber of Commerce and Industry. |
|
While an increase of around Rs 700-800 per tonne was effected in the rates of HR coil, the price of flats was increased by almost Rs 1,000 per tonne. |
|
The rise, said industrialists, would not only have a bearing on margins, it would also render the industry uncompetitive. "For large-scale steel consumers, the effect is not as bad because they get orders on a long-term basis. As a result, they are able to cope with such increases. Small units that rely on short-term orders are badly affected," said an industrialist. |
|
|
|