In a recently concluded meeting between the Chamber of Industrial and Commercial Undertakings (CICU) and Ludhiana Steel Rerolling mills Association, the parties have agreed on fixing scrap only once a day. According to the decision, scrap rates for the day would be finalized by 12:30 pm.
The move could protect secondary mills from price volatility and overcharging by traders. Mainly since in the last 15 days, prices of ferrous scrap have increased by over 10pc on a shortage of Sponge iron and pig iron. For most small-scale steelmakers, the rise has become difficult to absorb, particularly at a time when the COVID-19 pandemic has hurt businesses.
Hailing the move, Ludhiana industrialists have shown willingness to announce the rates of scrap daily on social media. The move could benefit both buyers and sellers of ferrous scrap with a benchmark price, and provide relief from betting activities. Besides scrap, the ingot rate in Ludhiana will also be fixed at 12:30 pm. Depending on regions, raw material prices even differed by Rs5,000-7,000/mt within the country.
Despite government stimulus to aid growth, the price rise has burnt a hole in pockets for MSMEs. Metal and alloy prices, including steel, copper, zinc, and brass, have been on an uptrend for the last three months gaining 30-35pc, with indications of a continued rally in the coming days. As they deal with a cash crunch and high input costs, many MSMEs are not able to fulfill their pending orders.
The meeting also discussed allowances for imports and metals and minerals to ease the shortage. The association has also requested to reopen the Sail yard in Coimbatore and reintroduce the system of allocation of raw materials to MSMEs at a subsidized price, like earlier, via SAIL, VIZAG, NSIC, SIDCO, and other Nodal State Government Distribution Systems.