According to Abhay Kumar Bajpai, managing director, UPSIC, steel prices in the market are so high and volatile that SSI units have stopped production. He said currently, rates ranged between Rs 45 per kg and Rs 55 per kg and SSI units cannot take the risk of taking orders or storing stock. He added the units were facing problems in honouring orders, taken earlier at low rates.
The corporation gets raw material in the form of iron and steel sheets from Steel Authority India Limited (SAIL) and other companies at subsidised rates, which it supplies to SSI units.
According to Anukool Mishra , proprietor, Chandan Steel of Unnao, production has stopped as there is uncertainty in the market. "SSIs work on a very thin margin and honouring old orders which were taken at low rates is a great problem," he said.
He added SSIs were also facing competition from major players in terms of rate and quality. "If we will not provide items at attractive rates and within a given time frame who would come to us," he said.
DS Verma, executive director, Indian Industries Association, told Business Standard that SSIs which fabricated steel component and utensils were really in a fix.
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"There are advance orders with them and no one ever expected steel prices to rise by 30-40 per cent," said Verma.
He added parties which had paid advances to steel SSIs would not take delivery at the higher rate. "This is the law of trading and that is why steel SSIs are in a fix," he added.