subject: Awareness in ferro alloys [print this page] Author: Parkash Trading Author: Parkash Trading
THE signs of revival in the fortunes of the steel industry, both globally and domestically, have brought cheer to a largely neglected industry ferro alloys whose fortunes are inextricably linked with that of steel.
Many Iron and Steel Company's announcement that its board had approved the setting up of a ferro chrome project at Richards Bay on the east coast of South Africa at a cost of Rs. 200-250 crores has given a fillip to the sector.
The manufacture of ferro alloys is highly power-intensive and therefore the cost of power is critical to the competitiveness of the producers. On an average 50 per cent of the total cost per tonne of ferro alloy is accounted for by power. Tata Steel has been considering the possibility of setting up a project either in South Africa or Australia for over a year with a decision pending the access to cheap power.
According to a Tata Steel spokesperson, in the first phase the company will set up a Rs. 300 crore, 1.20 lakh tonnes per annum plant and in the second phase the capacity will be doubled. The construction of the project is expected to commence in a year's time and will go on stream in the first quarter of 2005.
The Tatas have signed an agreement with the South African power utility Eskom for 15 years at very favourable rates.
The power cost is about 25 per cent of the power cost in India, where it ranges from Rs. 2.3-3 per unit against Re. 0.46-0.60 per unit in South Africa. The greenfield venture is expected to go on stream in mid-2004.
The Tatas' plan is to transport the chrome ore from Orissa to South Africa where the plant will convert it into ferro chrome. There is also the option of sourcing ferro chrome from South Africa itself, which boasts of largest chrome ore deposits in the world; accounting for well over 50 per cent. Tata Steel itself is one of the largest chrome ore exporters from India, having a 50,000 tonne ferro chrome furnace in Orissa.
Ferro alloys are used as additives and de-oxidising/de-sulfurising agents in steel manufacture. Ferro manganese and ferro silicon are used by alloy steel producers, while ferro chrome and charge chrome are used by stainless steel units. Other leading players in ferro alloys are: Jindal Steel and Power, Indian Metals and Ferro Alloys, Corporate Ispat Alloys and Ferro Alloys Corporation.
According to Indian Ferro Alloy Producers' Association (IFAPA), in 2001-02, the ferro alloy industry continued to be affected by recession with sluggish demand and constraints of high power tariff anti-dumping duty on input material, reductant, and anti-dumping duty on exports of ferro alloys. Consequently, the output dropped by 8.28 per cent during 2001-02 to 8.27 lakh tonnes from 9.02 lakh tonnes in the previous year.
In the mid-1990s, the industry was hit by excess domestic capacity and a demand recession made worse by substantial imports of ferro alloys by steel exporters. The slump was caused by inadequate indigenous demand and inability to compete on the international markets because of high power tariffs.
About 7-8 lakh tonnes of ferro alloys are produced annually and 35-40 per cent of the production worth Rs. 500 crores is exported. Bulk ferro alloys exports came down drastically by 41 per cent in terms of quantity and over 50 per cent in terms of value at 1.52 lakh tonnes (2.69 lakh tonnes) and Rs. 273.10 crores (Rs. 540 crores) respectively in 2001-02.
The export slump was attributed to sluggishness in international stainless steel and inability of Indian players to push exports. Worldwide, producers have cut ferro alloys production and accelerated the sales by clearing stocks. Many countries took advantage of the devaluation of their currencies but in India, devaluation did not take place to the corresponding level of competing countries.
The import duty on metallurgical coke was maintained at 15 per cent and pig iron and steel products were brought down to 5 per cent. Customs duty on ferro alloys has been maintained at 25 per cent for the last couple of years but this would be increasingly difficult to maintain owing to WTO norms. India was adversely affected by the imposition of anti-dumping duty on export of silico manganese by the U.S.
The IFAPA says the industry has sufficient raw material, highly qualified manpower, latest equipment and technology. It is priced out of the international market primarily due to the cost of electricity. It has requested that power should be made available at internationally comparable tariffs, that is, 1-3 U.S. cents per unit, and it is necessary to maintain customs duty on ferro alloys at higher levels or sustain it at 25 per cent basic. Besides, prices of raw materials like reductant and ores are government controlled which increases the price regularly.About the Author:
