Stainless steel consumption in India is growing at 7 - 9 percent annually since the last one decade as the country has now graduated as one of the top three consumers and producers in the world. Since most of the raw material is imported, domestic players remain under margin pressure. In such a situation, procurement planning and strategy will play a key role for meeting the increased requirement of raw materials which constitute around 70 percent of the total cost of production, said R Ganesh, Director - Sourcing, Jindal Stainless Limited in a freewheeling interview to Ritwik Sinha.
What is the current cost impact of importing ferro-nickel and stainless steel scrap?
Ferro Nickel (Fe Ni) and stainless steel scrap are two key raw materials used in manufacturing stainless steel. Almost 100 percent industry requirement for both these raw materials is met through imports alone as domestic availability is scarce. The pricing of Fe Ni and stainless steel scrap is completely dependent on the supplydemand scenario of Nickel in the market.
The pricing of both these inputs is also determined by the prevailing market prices of chromium (Cr) and mild steel scrap (MS Scrap). Broadly speaking, Nickel prices regulate the pricing of Fe Ni and stainless steel scrap. There is a scope of discount on Nickel at times but it varies according to market dynamics. There is 8-9 percent discount on Nickel as suggested by last few months trend. Moreover, there is a cost impact of 2.5 percent import duty on Fe Ni and stainless steel scrap which adds to the input cost.
Which are the countries from where ferronickel and stainless steel scrap are imported? What is the annual requirement?
Domestic Fe Ni requirement is completely met through imports as it is not available locally. However, stainless steel scrap is available in very limited quantity and not sufficient to meet the demand of stainless steel industry. Both the raw materials are sourced from all over the world like US, Europe, Middle East, South East and Far East, etc. The import requirement is not just met from one or two countries but business decision is taken on the immediate availability and quantity of the material. The annual requirement of Nickel including Nickel from Fe Ni and Stainless Steel Scrap is more than 65,000 tons.
What are the other materials imported by the stainless steel industry and by the company? Which are the major countries exporting the same?
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