Indian Ferro Alloys industry is passing through a tough situation at present. Decreased rupee value, increased power tariffs and cut throat competition are the various reasons for the declining state of Ferro Alloys industry.
Rohit Ferro Tech is one of the largest Ferro Chrome producers in India. Despite of owning any chrome ore mine, the company has managed to perform well against peers. It has been sourcing its chrome ore requirement from OMC Odisha. Mr. Rakesh Agarwal, Executive Director, Global Business, shared his views with Steel 360 on challenges and opportunities being faced by the Indian Ferro Chrome industry.
Q. Generally speaking the Ferro Alloys industry in India is going through a dull phase. How has Rohit Ferro Tech Limited performed so far this year?
We do agree that Manganese Alloys market at present is passing through a very tough situation due to cut throat competition and recession in Europe. Industry is trying best to survive by diversification in to value added products and also trying to carry out some trading activities for the survival of their company.
Q. What is your opinion on the Ferro Alloys market in India? How do you see the industry performing? What changes are needed to be made to be competitive?
Indian Ferro Alloys Industry is passing through a very tough time due to high cost of power, shortage of raw materials and poor demand in domestic market. This will continue till steel production in India will not increase and as long as we export in a big way to compete worldwide.
To change the scenario, Government has to take appropriate steps as under:
- To make special power tariff for Power incentive industries removing cross subsidy in line of worldwide tariff of Ferro Alloys producing countries
- To increase steel demand in domestic industries so that the demand supply gap becomes narrow
Q. With the risk in power-tariff and the trend likely to continue, do you see Ferro Alloys capacities ramping up in India?
Ferro Alloys is a power centric industry as more than half the cost of production is incurred as power bills. States with cheaper or subsidized power tariff attracts setting up of Ferro Alloys units. Production varies from state to state depending upon power tariff.
As far as current price is concerned the power tariff varies in states for different users. As a result, there is a difference in the cost of production, resulting in cut throat competition among them.
We do not think, Ferro Alloys capacities be ramped up in the current market situation. This can only happen when a single power tariff is fixed for all over India.
Q. How do you solve the problem of raw material procurement, when OMC production levels keep fluctuating?
OMC is basically selling Chrome Ore. Some of the Ferro Alloy producers have mines and some don’t. Those who do not have mines are dependent on OMC resulting in uncertainty in production. Although, OMC has a number of mines but only one or two mines are working and others are closed as they are unable to run their own mines. At the same time, as per the current guidelines, Government will not allocate new mines to the manufacturers, and will be first allotted to OMC. Government has to look into it and allow Chrome mines to only actual users/producers for value addition and not for sale for survival of the Ferro Chrome Industry.
Q. How has the Government mandate directing OMC to allocate 70% of its sales to mills in Odisha, impacted the Chrome Ore prices?
OMC has changed its policy at present, which says that 70% of total ore available for auction will be reserved Odisha based Ferro Chrome plants and rest 30% for other states. And it is working out well for the domestic industry.
Q. Global Stainless Steel production and consumption has been increasing each year. Does your company have any future plans of expansion in the near-term?
We do agree that Global Stainless Steel production is increasing which is good for Ferro Alloy industries. We have also planned to expand stainless steel production presently from 100,000 MT to 200,000 MT in coming years.