Power shortage hits northern steel output

Steel rolling mills and induction furnaces in north Indian states of Punjab, Chandigarh and Haryana are facing major blackout due to power diverted from these small and medium steel production units to farmers for paddy irrigation.

About 380 rolling mills and 120 induction furnaces are counting their days as production in these units has slipped to one-third of the average to 5 metric tonne per day in the last one month.

"This is the lowest production in the last one decade," said Anil Suraj, managing editor of Steel Times Weekly, who runs a rolling mill in Chandigarh.

According to the a government order, induction furnaces in the state should operate only for 15 hours a day and should be closed during the peak hours between 8 pm to 5 am.

Power demand in the region shoots up during paddy plantation season, but this is the first time that the availability of power for rolling mills and induction furnaces have come down dramatically. Steel units have been forced to shut down three-days-a-week and cut down work to half during working days, said Anil.

As a consequence, steel price has surged by Rs 1,000 in the last one month. In July alone, the price has gone up by Rs 600. With the current price revision, hot rolled coil is quoted at Rs 30,500 per tonne and cold rolled coil is being sold at Rs 29,700 per tonne. Ingot price has also gone up to Rs 21,100 per tonne.

"These prices are unlikely to go up further as buyers are not coming," Anil said. Meanwhile, the higher global demand pushed the sponge iron price, major raw material for steel making, up by Rs 1,000 to Rs 1,0,000 per tonne.

"Demand is very high as billet producers have received export orders from Vietnam and Southeast Asia ," said Amitabh Mudgal from Monnet Ispat.