There were rumours in the market about a complete shutdown of industries in Punjab due to rising COVID-19 infections and a shortage of oxygen supply, but market participants confirmed to Davis Index that the government has only directed them to stop processes that consume oxygen.
On Saturday, local media flashed news of a shutdown of steel mills and industries creating panic in the market. Several manufacturers including engineering goods producers, bicycle and auto parts manufacturers rely on local iron and steel companies for their raw material supplies.
Diversion of oxygen from steel producers to medical use would surely impact production to a certain extent, said mill owners, adding that it’s still better than a complete shutdown. Manufacturers in Punjab expressed that the government should provide subsidy for those who are willing to set up oxygen manufacturing plants in the state, as the initial cost is very high.
The disruption of steel production and increased landed cost of imported ferrous scrap prices have pushed up domestic scrap prices in the region. In April, ferrous scrap prices in Mandi Gobindgarh have increased by Rs1,000-1,100/mt ($13.38-14.72/mt) till date, while finished steel prices rose by Rs2,000-2,400/mt in the same period. If the shortage of oxygen continues finished steel makers could increase prices further, traders said.