Secondary steel manufacturing units in north coastal Andhra Pradesh have reduced production by 20-50 per cent over the last four months due to sluggish demand for steel in the market.
These include brands like Maa Mahamaya Steels, Simhadri Steels, Velagapudi Steel, Black Gold Steels, Aditya Steels and Ganga TMT. Each unit has a production capacity of 60-200 tonne a day and uses steel ingot and billets as raw materials, which are mostly supplied by Vizag Steel and SAIL.
“We are getting raw materials at reasonable prices, still most of the secondary units have reduced production because of low demand for rebars and other products,” Krishna Rao, director, Simhadri Steels, told Business Standard.
Vizag Steel, which has a stock of over 700,000 tonne steel, is offering its products at reduced prices and discounts to clear the backlog.
Secondary steel manufacturers allege the price difference between the products of Vizag Steel and the secondary steel units has come down to Rs 500-1,000 per tonne from the earlier over Rs 4,000 per tonne. “This is drawing consumers towards Vizag Steel’s products,” they said.
“This apart, anticipating a further fall in steel prices several steel consumers have postponed their construction plans as a results our stocks have piled up,” Rao said.