In an interview to Steel 360, M. B. Nagaraj, Sr. General Manager (Operations – Pig iron Plant), KFIL pointed out that Pig iron plants in South are compromising on productivity and cost, adding that controls on Pig iron production cost without sinter is very difficult. He also mentioned what all is favorable for Pig iron industry in quarters ahead along with some major concerns.
Q. How does Q2 FY 14 look for Pig iron demand from general engineering castings and sectors such as agriculture, government and heavy commercial vehicles? What price trend are you expecting? Will utilization of capacities improve any time soon considering the present market scenario (infrastructure spend is low)?
With the tractor segment performing very well, Q1 FY 14, it is expected to yield double digit growth rate for the sector. Also the meteorological department forecasting monsoons to be normal is a good indicator for Q2. Other light, medium and heavy commercial vehicles have not shown much of growth in off take, so Pig iron demand from the sector overall is anticipated to be decent.
Q. Over the next couple of quarters, what are the favorable factors for the foundry grade pig iron industry that is not performing well as of now? What are the major concerns for manufacturers going forward?
The opening up of mines in Karnataka is a ray of hope. Imposition of the 2.5% duty on Scrap imports is another favorable factor. Positive growth projections from automobile sectors and expected reduction in interest rates by the government are other favorable factors. Concerns for the industry are poor quality and high prices of Iron ore. Hike in fuel price results in high logistics cost which is a big concern as it brings down the realization for manufacturers. The degrading rupee puts pressure on imported Coke and pushing production costs further high is also a major concern.
(The full text of the interview is available in the June issue of the magazine.)