Friday, March 28, 2008

Steel price rise hits industry

I spotted the following report in The Hindu, but it struck me as being symptomatic of problems being faced, or likely to be faced by small manufacturers around the world:

Small enterprise units in this industrial town have curtailed production by over 40 per cent following increase in steel prices. In the last four months, prices have gone up from Rs. 36,000 to Rs. 48,000 a tonne. Krishnagiri District Small and Tiny Industries Association (Kridstia) president G.S. Ganesh says: “…[It] is affecting the very survival of many small-scale units. Anticipating a further increase, major suppliers are stocking steel. This has created an artificial scarcity in the market. Many units find it difficult to convince their customers to bear even a small part of the rise in the prices of finished products. A majority of the small industries are running at 60 per cent production capacity owing to scarcity.”

The continuously escalating price of steel, the inability to forecast prices going forward and the general lack of availability of steel is making it increasingly difficult for manufacturers to plan forward production or take orders. Whilst so far this year, this problem has been a great inconvenience, it is beginning to become a serious problem. The steel producers have a major reasonability to their customers to bring some order to the current situation, or they may find many of their customers are no longer around, and that the damage to the manufacturing base will be long term. A high price to pay for a windfall profit.

The Hindu : Front Page : Steel price rise hits industry

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