Surge in local iron ore and pellet prices forcing India’s secondary steel mills to close down, curtail output

Thursday, 22 July 2021 10:30:25 (GMT+3)   |   Kolkata

The unprecedented rise in prices of iron ore and pellets is compelling secondary steel mills in various Indian states to close down or curtail production drastically, the Steel Rerolling Mills Association (SRMA) said in a statement on Thursday, July 22.

According to the association, with iron ore and pellet prices touching historical highs, at least five secondary steel mills in the medium and small-scale range located in the eastern state of West Bengal have closed down over the past few months and 100-115 secondary mills in other states have cut down production by 15-50 percent.

An indication of the crisis in the sector is indicated by the fact that, since most of these mills operate through the electric arc furnace (EAF) route, they are surrendering their power requirements at electricity distribution companies in their respective locations.

According to the association, domestic pellet prices surged to INR 15,000/mt ($202/mt) in June 2021 from INR 4,500/mt ($60/mt) in May 2020, and the association is demanding the imposition of export tax on pellets to ensure higher availability of the raw material in the local market.

The association is also seeking a government permit for up to five secondary mills to form a consortium and bid at an auction of iron ore and pellets and reduce dependency of each mill on commercial purchases from the open market.

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