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Performance of the Ferro Alloy Industry Its present status and the future


(February 2002)

-By T. S. Sundaresan

(Secretary General - Indian Ferro Alloy Producer's Association)

Though the growth of the steel industry has not picked up as expected, that of ferro Alloy industry has stepped up more than expected

Performance of the Ferro Alloy Industry is directly linked with the performance of the Steel Industry. The growth of the Steel Industry has not picked up as expected, but the growth of the Ferro Alloy Industry has stepped up much more than the expected level. Ferro Alloys is a highly power intensive industry and electrical energy is considered one of the major raw materials used 24 hours a day, in the production of ferro alloys.

The prices of inputs viz., power, coke and manganese ore have increased by over 100 % during the post liberalised period, which is mainly controlled by Government and Semi-Government organisations. On the other hand, prices of ferro alloys have fallen to the rock bottom in the global market, after 1995-96.

The major ferro alloy producing countries like South Africa, Russia and China are getting advantage from the devaluation of the home currency vis-a-vis US$, by over 50 % in last 3 years. Compared to this, the Indian Rupee has devalued around 6 % in the same time period.

Customs Duty on ferro alloys has been brought down by 80 % during the post liberalised period and the same is at present 25 % basic duty, resulting in increase in imports at very low prices.

Production and exports of ferro alloys for last 5 years are given in Table (I) and (II) respectively. It would be observed from the Table (I) that the capacity utilisation is ranging from 50 to 55 % and the balance 45-50 % is lying idle. Table (III) gives the Imports of ferro alloys upto 1998.

The industry has potential to double its exports, but only due to high power tariff in the country, the industry is unable to compete with international players.

During the post liberalised period, the Industry started facing a number of issues:

1) Excess capacity and low stagnation demand.

2) High power tariff. The power tariff which is available for international players is between 1 to 3 US cents per Kwh, and the same is costing for Indian players around 8 to 9 US cents.

3) Even after a decade of liberalisation, the Ferro Alloy Industry is not given a level playing field, by supplying power at international comparable tariff.

4) Implementation of Anti-dumping duty on Low Ash Low Phos Metallurgical Coke which is not available in the country. Ferro Alloy exporters have to pay ADD on import of Metcoke from China, which increases the cost of production by Rs 1000/- per tonne.

5) USA has already levied preliminary Anti-dumping Duty on exports of Silico Manganese from India into USA, which is going to affect the export performance of the Industry. Understand similar action is being taken by Indonesia, and the investigation on the same is on, for levying preliminary Anti-dumping Duty.

6) Steep increase in input cost - Manganese ore prices have increased by over 100% for domestic producers during the post liberalised period, and the good quality of manganese ore has been exported at very low prices. Increase in railway freight and railway siding charges - Railway freight and railway siding charges have increased every year, which in turn adds to the cost of production of ferro alloys, for domestic market as well as exports.

7) High Excise duty, blocking working capital of the units.

Suggestions to revive the Industry and support solicited from Government:

A) Power to be made available at international comparable tariff, i.e., at US 3 cents per Kwh maximum.

B) Policy to give NTPC/NHPC power from Central Government’s unallocated quota of 15% to be made absolute and mandatory for State Electricity Boards to adopt.

C) Uniform wheeling charges should be prescribed by Central Power Ministry for all SEBs, for wheeling NTPC power, which is at a very high voltage, to Ferro Alloy Industry at reasonable cost of 5% of NTPC tariff.

D) The Industry welcomes the Commerce Ministry’s suggestion to consider input like Power as a basic input for export production, needs to be rebated for Duty Drawback calculations.Government should consider awarding the difference between the power tariff in India and international tariff, which is on an average 200 paise per Kwh as Duty Draw Back on power, for export of ferro alloys, power being the basic input for production of ferro alloys.

E) DEPB Scheme should continue for next 4 to 5 years, till cross-subsidisation of power is totally removed.

F) To implement Counter Vailing Duty on goods imported from neighbouring countries like Bhutan, Nepal etc., wherever Government has free trade agreement under the aegis of Treaty/Agreement, as CVD is Modvatable, and regularise the entire transaction

G) To remove Anti-dumping duty on Low Ash Low Phos Metallurgical Coke imported into India from China, as the same is not produced indigenously.

H) Government should take up with WTO, not to implement Anti-dumping Duty on export of Ferro Alloys to USA and other countries.

I) To waive Customs Duty, Additional Duty and other levies, on Molybdenum Ore / Moly Oxide, Tungsten Ore, Wolframite Ore, Scheelite Ore, Nickel Oxide, Vanadium ore, etc., used in production of Noble Ferro Alloys, as the same is not produced/ available indigenously.

J) Manganese ore prices to be reduced and good quality of manganese ore should be given priority for domestic usage, rather than exporting the same at very low prices.

K) To reduce Railway Freight on movement of all raw materials required for producing Ferro Alloys for domestic and for export purpose, as also on transport of Ferro Alloys from the Factory to the Port of loading for exports.

Statement showing production of Ferro Alloys during 1996-97 to 2000-01 as available with the Association.

(Qty. in Tonnes)

 

 

 

 

 

 

Product

2000-01

1999-2000

1998-99

1997-98

1996 - 97

MEMBERS/NON-MEMBERS

 

 

 

 

 

BULK FERRO ALLOYS

 

 

 

 

 

HC Ferro Manganese

169,269

127,455

162,715

159,164

184,966

MC Ferro Manganese

342

7,461

488

903

1,940

LC Ferro Manganese

751

1,500

1,509

1,259

1,041

Silico Manganese

276,008

232,611

192,793

198,282

174,964

LC Silico Maganese

0

0

0

2,185

0

Ferro Silicon

67,349

56,286

57,262

79,742

78,326

HC Ferro Chrome/Charge Chrome

381,879

313,803

305,327

338,897

238,653

LC Ferro Chrome

460

0

1,947

5,467

6,730

Silico Chrome

0

0

0

311

6,427

Ferro Silico Magnesium

2,460

2,310

1,717

1,429

1,458

TOTAL

898,518

741,426

723,758

787,639

694,505

NOBLE FERRO ALLOYS

 

 

 

 

 

Ferro Aluminium

1,510

0

0

3,058

 

Ferro Molybdenum

1,881

1,693

662

501

 

Ferro  Zirconium

20

15

0

15

 

Ferro Boron

0

0

0

15

 

Ferro Vanadium

674

735

345

175

NA

Ferro Tungsten

25

25

0

3

 

Ferro Titanium

0

0

8

0

 

Ferro Phosphorous

0

0

20

0

 

TOTAL

4,110

2,468

1,035

3,768

 

GRAND TOTAL

902,628

743,894

724,793

791,407

694,505

PN:  (1) Production of Non-Members given above is Estimated

 

 



Statement showing Exports of Ferro Alloys and percentage of Exports over Production during 1996-97 to 2000-01

TABLE (II)

(Quantity in Tonnes)

Product

2000-01

1999-2000

1998-99

1997-98

1996-97

MEMBERS/NON-MEMBERS

 

 

 

 

 

BULK FERRO ALLOYS

 

 

 

 

 

HC Ferro Manganese

5,723

200

15,766

991

1,100

LC Ferro Manganese

0

0

0

0

40

Silico Manganese

86,798

63,708

54,022

56,192

41,961

Ferro Silicon

5,658

4,849

9,467

11,650

6,589

HC Ferro Chrome/Charge Chrome

171,088

137,328

168,630

186,687

158,617

LC Ferro Chrome

0

0

524

3,333

3,500

Ferro Silico Magnesium

260

220

269

122

0

TOTAL

269,527

206,305

248,678

258,975

211,807

Value (Approx.)Rs in Million

5,546

3,925

5,153

5,030

4,079

NOBLE FERRO ALLOYS

 

 

 

 

 

Ferro Vanadium

0

0

51

28

 

Ferro Molybdenum

0

0

5

0

 

Ferro Phosphorous

0

0

20

0

 

Total

0

0

76

28

 

Value (Approx.)Rs in Million

0

0

37

15

 

GRAND TOTAL

269,527

206,305

248,754

259,003

211,807

 

 

 

 

 

 

Value (Approx.)Rs in Million

5,546

3,925

5,190

5,045

4,079

Percentage of exports

 

 

 

 

 

over Production

29.86%

28.30%

34.32%

32.88%

30.50%

 

TABLE (III)

Statement showing Imports of Ferro Alloys from 1993-94 to 1997-98

(Quantity in Tonnes)

  

Ferro Alloys

1997-98

1996-97

1995-96

1994-95

1993-94

HC Ferro Manganese

14,993

19,900

2,287

515

8

Silico Manganese

1,384

646

451

240

23

Ferro Silicon

14,112

17,900

22,510

9,828

1,550

HC Ferro Chrome/ChCr

12,951

7,781

11,894

5,744

1,134

Silico Chrome

2,844

350

1,562

91

241

Ferro Silico Magnesium

226

254

273

181

11

Ferro Molybdenum

245

217

358

336

815

Ferro Vanadium

50

47

107

82

39

Other Ferro Alloys

2,803

2,579

1,270

798

470

 

Total

49,608

49,674

40,712

17,815

4,291

Import Duty

20%

25%

30%

50%

85%

NOTE: Import of Ferro Nickel is not shown, as the same is not manufactured  indigenously

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