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Stock Advisory in Indore, Foundry industry melting down as steep iron ore prices take a toll
In industries like automobiles, where foundries have a margin of 7-8 percent, passing over the increase in cost is the only option available
The Indian foundry industry is not able to utilize increased order inquiries due to a 30-40 percent rise in the cost of iron ore in the last few months. This comes at a time when the industry is trying to recover from the effects of demonetization and the Goods and Services Tax.
India’s foundry industry is the third largest in the world with a production capacity of 10 million tonnes in 2015-16 after China (40 million tonnes) and the US (11 million tonnes). It caters to the automobile, railway, machine tools, defense, aerospace and electrical industries.
Brijesh Dudhagara, Secretary, Rajkot Engineering Association, said suppliers and miners were raising iron ore prices every fortnight. Six months ago, the price of iron ore was ~22 a kg and today it is ~32 a kg. Prices are expected to rise further. Rajkot is a hub for foundries.
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