Steel units in Mandi Gobindgarh, steel hub of Punjab, expect demand to pick up considering a surge in construction activity in the roads, railways and housing sectors but they have urged the state government to restore regular power supply to take advantage of the situation.
The Gobindgarh Furnace Association, Gobindgarh Steel Chamber of Commerce and Industry, Steel Traders Association, All India Steel Rerollers Association are among those, which expect sunny days ahead. A cross section of industry associations told FE that already prices of cold-rolled coils, sheets and TMT had risen by about Rs 2,000 to Rs 3000 a tonne in the past few months.
Representatives of industry associations say unprecedented power cuts in Punjab have crippled over 450 steel units located at Mandi Gobindgarh as it has been getting only 60-hour power supply per week during the past six months.
The Punjab State Electricity Board imposed a complete power cut on re-rolling, arc and induction furnace units. Now a number of units have shifted to neighbouring Himachal Pradesh , Jammu and Kashmir and Uttaranchal to avail of the special concessions and subsidies.
Vinod Vashisht, president, Mandi Gobindgarh Steel Re-rolling Mills Association, told FE that in last few months more than 100 scrap units had closed down due to power cuts and also due to fall in demand. ?Steel prices had fallen drastically and because a majority of the secondary steel producers here bought the raw material, iron scrap, at high rates and the cost of making ingots or rolled products was also high, industrial units had no option but close down business on the one hand there was power problem and no one would like to sell at the prevailing low prices.?
Puneet Nanda, another entrepreneur, told FE that ?the steel furnaces and other steel rolling mills that produce TMT, angles and structures had to slash production by more than 50% or close down for the units to survive as there was no power available?. He said that the government should have reviewed situation as power cuts had been imposed as paddy crop was then facing drought like conditions.
The ground reality is more shocking because as per Central Electricity Authority projections for current financial year, ? Punjab will have a peak load shortage of 28.3%. As per Load Generation Balance report of CEA the net energy requirement of the stae during year 2009-10 is likely to be 44301 million units and the anticipated power availability during the year will be only 37598 million units. The maximum power shortage in the state was 23.83% in July this year.