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50pct foundry units in Rajkot face closure as iron ore costs soar

Steel News - Published on Thu, 18 Jan 2018

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Business Standard reported that despite increase in order enquiry, the Indian Foundry Industry is not able to deliver due to the steep increase in raw material prices, especially the cost of iron ore, which rose nearly 30-40 per cent during past few months. This comes at a time the industry is trying to recover from the demonetisation and GST impact.

Brijesh Dudhagara, secretary, Rajkot Engineering Association (REA) alleges that iron ore suppliers/ mines keep raising prices every 15 days. Six months back, the price was Rs 22 a kg and today it is Rs 32 a kg and it is expected to increase further. Rajkot is a hub for foundries.

He noted, most of the contracts with buyers were signed six months back and customers are not ready to revise the price. He said "We are not able to understand why prices are going up so sharply since iron ore demand is dropping in the domestic market. Already 30-40 per cent of the production is down and if the trend continues for the next six-eight months, atleast 50 per cent of the units will close.”

At 15 million tonnes a year, India's foundry industry is the third biggest globally in terms of production capacity (10 million tonnes in FY16), after China (40 million tonnes) and the US (11 million tonnes). It caters to Auto, Railways, Machine tools, Defence, Aerospace, Electrical and others.

The Indian foundry industry is around $16-17 billion in size with around 6,500-7,000 units across the country. Almost 70 per cent of the production is from the top 30 per cent of the foundry units, while the rest of the 30 per cent is contributed by the 70 per cent of the industry. The production is expected to be at around 11 million tonne by the end of current fiscal, he said.

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Posted By : Nanda Koijam on Thu, 18 Jan 2018
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