Indian steel manufacturers might face a slight glitch in the supply of Ferro Silicon, one of the key raw materials for steel-making, as the Ministry of Steel has passed an order in the month of February to include the alloy under mandatory certification by April 2020.
“This order may be called the Steel and Steel Products (Quality Control) Order, 2019. It shall come into force on the date of its publication in the Official Gazette. It shall apply to steel and steel products … except for steel and steel products for export which conform to any other specification required by a foreign buyer,” said the order dated 22nd July 2019.
While the order was dated 22nd July 2019, companies in Bhutan and Norway and other countries, major suppliers of Ferro Silicon, came to know about it around February 20th, said the companies in an interaction. “It was communicated late and we also missed it as it came under the name steel and steel products. They usually come under ferroalloys,” said Kári Marís Gudmundsson, Global Sales Manager, Elkem Ferrosilicon from Norway.
Ferro Silicon is an alloy used by the steel-makers to increase the performance of steel as an industrial material. It de-oxidizes the steel, blocks the heat and prevents loss of carbon from the molten steel. Ferro Silicon prices in the market was between Rs 60,000 - Rs 65,000 per tonne during December and March and went up to Rs 90,000 per tonne.
India imports around 300,000 tonnes of Ferro Silicon from various countries like Bhutan, Norway and China every year and out of which only 1/3 rd is manufactured in India. If the deadline is not extended, the steel companies might have a shortage of Ferro Silicon, said Kari.
“To make 1 MT of steel, the companies need 600 tonnes of Silicon. Even though it’s a small number it is important”, said IQ Minerals and Metals CEO, Siddharth Bothra.
IQ Metals and Mining is a global supplier of ferroalloys, chemicals, metals and coke products. The company has sent a letter to the Minister of Steel, Dharmendra Pradhan on Monday requesting a deadline extension.
“This regulation will lead to an increase in the price of Ferro Silicon to unreasonable level due to scarcity of it after 22nd of April 2020,” he said in the letter. Druk Wang Alloys in Bhutan, one of the biggest supplier of Ferro Silicon to Indian steel companies like JSW, Tata Steel and SAIL, might look for exporting to other countries if the process gets delayed.
“We have already applied for the certification. The process is cumbersome and it will take another 9-10 months. The company produces 1000 - 1400 tonne a month and we export around 50% of our total production to India. We will start looking for other countries to sell,” said Druk Wang’s MD, Chimi Dorji Norbu.
“A few companies, including a Bhutan-based company have applied for the license only in February and are yet to be cleared. This will take a long time, about 9-13 months, said sources from the Bureau of Indian Standards, requesting anonymity. However, the steel companies in India said that the raw material amounts for just 1% or lesser and can be sourced from the local manufacturers if there is a supply shortage.
“Going forward all the suppliers must go through this process, My take is that I don’t see a big disruption coming because of this. As the spend base on these Ferro Silicon is not big and it will be just 2%”, said Vedanta Electrosteel CEO, Pankaj Malhan in an earlier interaction. Even though the product is insignificant in terms of quantity, the product is necessary and it is irreplaceable in terms of cost, said Elkem’s Kari. (economictimes.indiatimes.com)
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