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Increased steel price hits SMEs in Pune; some scale down, others stop operations

Back in June, the central government had slapped anti-dumping duties on specialised steel to stop the arrival of cheap imports, and this factor may also have contributed to the present crisis.

Written by Partha Sarathi Biswas | Pune | December 12, 2020 7:19:50 pm
floor space index, construction, real estate, hike, mumbai news, Uddhav ThackerayExpress File Photo/Used for representational purpose

A sudden increase in the price of steel has forced small and medium enterprises (SMEs) in Pune and Pimpri-Chinchwad to scale down their operations. In case the price escalation does not correct itself, many of the industry stakeholders say they may have to continue scaling down their operations though their order book is full at present.

Sandeep Belsare, president of Pimpri-Chinchwad Small and Medium-scale industries, said the price of steel has increased by almost 40 per cent since October. “Such steep rise wipes out profits, making the whole operation unviable for us,” he said. Many units have even stopped their operations for the time being, he said.

Steel is the basic raw material for the sector, which deals with automobile giants, and therefore an increase in its price impacts its operations directly. As per estimates, nearly 20,000 tonnes of steel are used in industrial operations of the sector in Pune every month.

Industrial-grade steel is sourced from both domestic and international steel manufacturers, said Deepak Karandikar, vice-president of the industry body Mahratta Chamber of Industries Commerce and Agriculture.

Karandikar attributed the sudden price rise to a host of reasons. “Steel manufacturers normally undertake repairs by suspending their operations. At this moment, this is happening, which has seen supply thinning out,” he said.

Back in June, the central government had slapped anti-dumping duties on specialised steel to stop the arrival of cheap imports, and this factor may also have contributed to the present crisis. There is a demand-supply mismatch in the market, said Karandikar, adding, “We are not certain when the situation will normalise.”

Work for the SME sector had been scarce in the months after the Covid-induced lockdown, with major automobile giants seeing a sudden dip in demand for vehicles. But in the months since, the relatively good demand for cars in the festival season has resulted in Pune SMEs reporting almost pre-Covid levels of work and employment.

Meanwhile, Belsare said SME stakeholders have decided to write to Prime Minister Narendra Modi, seeking his intervention in this matter. “There should be some stability in the prices of inputs, otherwise it becomes difficult for us to operate,” he said.

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