Indian Ferro Alloys industry is passing through a tough phase in the current fiscal owing to the poor demand for steel in the market. Ferro alloys industry is linked directly to the steel sector and thus has effect on economy of the country.
Ferro Alloys production in India began around six decades back in 1950s through electric submerged arc furnace route. Initially, small furnaces were installed and only manganese alloys was produced. Lately, they also started producing Chromium Alloys which was the most important ingredient in the manufacturing of Iron and Steel.
One of the prime reasons for degradation of the Ferro alloys industry is the increasing power tariffs in the country. 40% of the total production cost is power cost. With depreciation in the value of rupee against the dollar, coal imports for fulfillment of fuel needs of the country, has become expensive resulting in to increase in power costs over the past few months.
India’s total export of Ferro alloys in FY 13 was 1.66 MnT, whereas in FY 12 it was around 1.52 MnT. However, the 10% of increase was not satisfactory for the industry as the expectations were higher. The Indian Ferro alloys export industry is facing a tough competition from other countries like Ukraine, South Africa, Brazil and others due to their low prices in comparison to Indian Ferro alloys in the global market.
Ferro alloys are manufactured from Manganese ore. The availability of good quality manganese ore is not satisfactory in India. The Ferro alloy industry gets only 45% of manganese ore from domestic market, while it has to import the rest. Thus export quality material of Ferro alloys depends on the import of good quality manganese ore. Imports of manganese ore in the country has increased by 75% in last two years at about 2.32 MnT in FY 13. Even though with such increase in imports of the raw material, Ferro alloys industry is unable to fulfill its needs for the raw material, resulting in low production.
The risks related to the Ferro alloys industry also include fluctuation in demand and supply for the material, tough competition from other supplier and production cost variations. Weakening rupee is also a threat to the industry with the increasing import rates of the raw material and low demand in the market for the product.
Experts are of opinion that with improvement in steel demand, Ferro alloys industry will look up too.