Around 400 small scale foundries in Coimbatore, a major foundry hub in India, have shut production owing to the high raw material prices, stated local media. Foundries are huge consumers of metals including steel, aluminium, stainless steel and also non-ferrous metals used for casting and some alloys too to add to steel.
These foundries decided to go on a strike in an attempt to bring down the high prices of raw materials and are seeking government intervention to high down raw material cost. They are affiliated to the Coimbatore Tiny and Small Foundry Owners Association (COSMAFAN). The strike will affect the industry and result in a daily loss of Rs300mn, said the association’s President, Shiva Shanmughakumar. High raw material prices not only affect foundries but also downstream industries, including automobiles, textiles, pump and motor manufacturers, appliance makers, who are major consumers of foundry products, stated Shanmughakumar.
Since March, raw material prices have increased between 35-55pc, which is hurting foundries’ margins. The association believes that the hoarding of raw materials by traders has resulted in an artificial price hike.
Other associations and industry segment also share the same concern and are struggling with the high price of metals. Several metals have hit fresh highs this year and market participants shared that some mills and smaller consumers have also decided to wait for prices to decline before they make fresh raw material purchases.