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The 250 odd foundries in West Bengal are facing a severe pressure on margins as pig iron manufacturers and traders in the state have hiked prices steeply.

Protests by the Indian Foundry Association (IFA) against the price rise have been ignored by major pig iron manufacturers. A section of pig iron traders have aggravated the problem by creating an artificial scarcity of the basic raw material in the last couple of months.

Amal Banerjee, chairman of IFA, said that between July and November this year, pig iron manufacturers have increased product prices by more than Rs 1000 per tonne. Prices are ruling at around Rs 7000 per tonne.

“Indian Iron & Steel Co Ltd (IISCO) continues to be the major producer and supplier of pig iron in the eastern region. In the past, supply of pig iron was routed through representative bodies like IFA which helped foundries procure this basic raw material at a competitive rate. But following a change in IISCO’s supply policy, the product is now routed through a group of traders,” he explained.

A section of trade have formed a cartel to create scarcity of the material though it was selling at high prices in the grey market. The high prices were not going to IISCO but was being collected by the traders.

“Even the allocations made by the Development Commissioner for Iron & Steel (DCIS) in favour of the association are not being honoured,” he told Business Standard.

This has forced several foundries in the state to procure pig iron from Raipur and other producing areas to keep the foundries running. However, non-IISCO pig iron was expensive on account of freight costs. IISCO officials could not be contacted.

Banerjee said top officials in IISCO had indicated that the foundries should provide Rs 75 crore as a guarantee if the foundries require 60,000 tonnes of pig iron every year. “IFA is sure such a condition is not being imposed on the traders selected to lift products from IISCO”, said Banerjee.

The demand supply picture of pig iron in the country however indicates that supply exceeds demand. Total availability of the material is around 39 lakh tonnes while consumption is around 27 lakh tonne. IISCO manufactures around 14,000 tonnes per month and caters to the bulk of pig iron demand in the state.

A rise in prices of IISCO pig iron has forced foundries to procure material from players like Jayaswals Neco Ltd, Rourkela Steel Plant, Bhilai Steel Plant, and Neelachal Ispat Nigam. Though the selling price was competitive, the high cost of freight was proving to be a problem.