Iron Ore Seems to Have Hit Steel Companies in The Small and Medium Segments The Hardes

Business Standard reported that the shortage of iron ore seems to have hit steel companies in the small and medium segments the hardest. 

According to recent data by the Joint Plant Committee, the non alloy and carbon steel segment saw a fall of 2.1% in production in the April to November period. Overall, the decline in production stood at 1.6%. Total production in the segment stood at about 27 million tonnes, a little more than the combined output of the main and major producers.

Mr Aditya Jajodia MD of Jai Balaji Group said that “We are operating at 60% to 65% capacity and given the demand, we should operate at 80% to 85%. But iron ore shortage is holding us back. We normally source iron ore for our plant in Bengal from Odisha. But now, the state has decided to reserve 50 per cent ore for domestic industries.”

Mr Jajodia, who sources ore from private miners said that “Lump ore prices range between INR 4,500 and INR 7,500 a tonne, while globally, prices are hovering at USD 100 a tonne to USD 105 a tonne.”

Jai Balaji's woes are representative of the hurdles faced by plants in the small and medium enterprises segments.

Bengal doesn’t have iron ore; most units in the state source ore from Odisha. The Odisha government's latest diktat on reservation of ore for domestic users has added to the woes of companies such as Jai Balaji. While the clampdown in Goa has hit exports, those in Karnataka and Odisha have primarily hit domestic steel players. The woes are not restricted to availability alone; an overall shortage in the market has raised prices.