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Scrap metal no longer hot item as auto sector hits reverse gear -India
Date: 12-11-2019 00:00:00

The slowdown in the auto sector, which has hit micro and small manufacturing units and jobwork units in the district, has also affected the last link in the manufacturing chain, the scrap market. The reduction in production and the subsequent reduction in orders to micro and small units has reduced the demand for scrap. While micro and small industrialists say that due to the fall in price, they are unable to recover the costs, scrap dealers say the fall in demand has also reduced their income. Manufacturing and jobwork firms involve machining of raw materials or castings. These are made of mild steel, stainless steel or aluminium. The process generates scrap that industrialists sell to scrap dealers, who, in turn, sell it to foundries for recycling into raw material. Industrialists say that since 1990s, bigger industries that give raw material to be machined to micro and small jobwork units deduct the cost of scrap from the labour cost they pay per piece. Smaller units, in turn sell the scrap and recover the costs. This helped them balance the costs. But now, with the scrap price falling, they incur losses, said J James, president of the Tamil Nadu Association of Cottage and Micro Enterprises’ (TACT). The price at which scrap dealers bought stainless steel scrap from industries six months ago was around Rs 29/kg. It has come down to Rs 20 to Rs 22/kg. Prices of mild steel and cast iron scrap have come down from around Rs 25 to Rs 15. Aluminium scrap price has almost halved from Rs 80 to Rs 40. Both pump and automotive industries use steel castings for components such as valves, gears and gear boxes. “Now, with the demand dropping, the scrap price has also come down,” said S Surulivel, state vice president of Laghu Udyog Bharati, an association of small and micro industrial units. “With the price of 1kg stainless steel scrap falling by Rs 9, we face a loss of Rs 9,000 per tonne of output. This has stressed the already ailing sector,” said James. Scrap dealers said their business has been hit badly. “Usually, we would trade around 50 to 60tonnes of scrap a month. Now, we are selling just around 30 to 40 tonnes,” said V Palanisamy, a city-based scrap dealer. “We are selling most of the scrap to foundries here and those in places such as Ahmedabad.”

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