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Foundry Daily News

23. March 2008

Foundries want coke pressure on China, regulator at home

Calcutta (India) - Foundries and exporters of castings, mulling a shutdown from April 1 because of the relentless increase in prices of raw materials like pig iron and coking coal, have urged the government to set up a regulator for the sector. Pawan Sureka, chairman of the Indian Foundry Association, said the government must restrict the export of iron ore, ban the export of pig iron and ensure that pig-iron manufacturers do not increase prices by more than once a quarter.

RP Sehgal, the eastern region chairman of the Engineering Export Promotion Council, said the government must also “armtwist” China to remove its duties on coking coal exports.

“China imports 78 million tonne of iron ore a year from us. All that we need is 5 million tonne of coke from China at the current capacity levels,” said Sehgal. Export and other duties have pushed up the prices of Chinese coking coal to $570 a tonne against the earlier and viable level of $450 a tonne, Sehgal said.

Sureka said a 30% increase in input prices over the past six weeks has pushed up production costs by 25% and most units are either closed or on the verge of closure. Pig iron prices have moved up from Rs 18,600-Rs20,300 a tonne on January 31 to Rs 24,900- Rs 27,500 a tonne at present. Sureka said castings exporters have not been able to pass on more than 5-10% of the increase to buyers in major Markets like the US, which accounts for 80% of Indian casting exports.

“In the domestic market for capital goods, we have not been able to pass on the price increase at all,” Sureka said. Within the country, the foundries’ major consuming industries are automobiles, infrastructure and the railways.

Sehgal said half the foundries making grey castings are closed and are negotiating with clients for a price increase before resuming production.

Indian exports account for 80% of the US market of 1,20,000 tonne of castings, and US-based manufacturers are now becoming more competitive because of access to cheaper iron ore and scrap iron and steel.

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