Punjab steel makers cut production by 50%

Hit by sluggish demand and declining prices, Punjab's steel makers have slashed production by 50 per cent to minimise their mounting losses.

"We have reduced our production capacity by 50 per cent as the demand for steel and prices have dipped sharply," North India Induction Furnace Association President K K Garg said today.

Punjab's steel industry, having a 20 per cent share in the country's secondary steel production, has a capacity of producing 8,000 metric tonne per day.

"The steel industry received major jolt when the light engineering industry including bicycle, hand tools, forging, machine tools cut down their orders considerably in view of reduction in their export orders due to lack of demand in global market," steel experts said.

At present, the industry is just using its capacity to cater to the construction sector. "Since the prices of tor steel have come down to Rs 31,000 per MT from Rs 46,000 per MT, the construction sector is still placing orders for steel," said Sanjiv Garg, owner of a Ludhiana-based firm.

Falling steel ingot price has also been another major factor forcing induction furnaces to cut down their production capacities, experts said.

Prices of ingots are hovering around Rs 27,500 per MT at present. Ingot rates have even touched the highest level of Rs 42,000 per MT this year and even dipped to the lowest mark of Rs 23,000 per MT.

Sensing that steel prices would not improve in the near future, the induction furnaces and scrap importers have already canceled their steel scrap orders.

Besides, experts said: "Because of the depreciation in rupee, the actual price to be paid by importers will go up, which will further add to their burden."