August 09, 2008

Indian refractory industry facing raw material constraints

BL reported that the Indian refractory industry is faced with a raw materials crisis due to exports curbs by China coupled with spiraling costs of key inputs. Indian refractory industry has been considerably dependent on imports from China for critical raw materials, such as brown fused alumina and fused magnesia.

As per report the landed prices of imported raw materials, too, have gone up substantially during last 12 months.
1. The landed cost of brown fused alumina imported from China has gone up from INR 16,446 per tonne as on March 31st 2007 to INR 35,034 per tonne on March 31st 2008, up by 113% YoY
2. The landed price of fused magnesia has gone up from INR 17,746 per tonne on March 31st 2007 to INR 25,097 on March 31st 2008 up by 41% YoY.
3. The price of landed calcined bauxite has also gone up from INR 9,397 per tonne on March 31st 2007 to INR 20,670 on March 31st 2008 up by 120% YoY.

The Indian refractory industry requires about 50,000 tonnes a year of brown fused alumina and 30,000 tonnes a year of fused magnesia and most of this is imported from China, as India does not produce sufficient quantities of equivalent quality. But in last 3 years to 4 years China has progressively introduced measures that discourage refractory exports. These include licensing, quantitative restrictions, export duties and withdrawal of export benefits.

As per report, INR 3,100 crore worth Indian refractory industry comprises nearly 100 established units, including 10 large plants, 24 medium scale units and the rest being in the small-scale sector. The industry has an aggregate production capacity of 2 million tonnes a year but the capacity utilization is around 60% only. About 75% of the refractories that are manufactured find application in the steel industry, 12% in the cement industry, 5% in non ferrous industries, 3% in the glass industry and the balance in other industries.