How will Power Subsidy Waive Off Impact Maharashtra Steel Industries ?

SteelMint learned from it's credible sources that power subsidy has been waived off across Industries in Maharashtra state from government end where they used to get subsidy of around INR 1.30-2.00/unit.

Steel mills (rolling mill & furnaces) have got their due bill recently where they have been notified that subsidy amount has waived off and bill payment needs to be submitted in a short while.

The power subsidy exemption will ultimately force industries based in Vidarbha, Marathwada and Jalna to pay higher charges but they are hopeful to get it reimbursed in the near term billing cycle most probably from Apr'20 onwards.

Currently they will have to pay the bill with higher tariff of around INR 7-7.5/unit, which will increase production cost by around INR 1,200-1,300/MT.

"Our cost of production for this month rose sharply by INR 1,300/MT in billet & about INR 200/MT in rebars than the earlier", one of the renowned rebar producers in Jalna shared which has monthly hot rolling installed capacity of about 50,000 MT.

Most of the hot charging and standalone induction furnace units of Maharashtra are based in Wada as well as in Jalna.

As per manufacturers in the state, in order to make one metric ton of hot metal about 650-700 power units are consumed, if they are melting about 80% scrap and remaining is sponge iron & cast iron.

-- Yesterday, billet traded at INR 29,000/MT ex-Mumbai & INR 28,000-28,200/MT ex-Jalna. Inline 12mm rebars deal assessed at INR 33,500-33,900/MT ex-Mumbai & INR 35,100-35,500/MT ex-Jalna.