10 steel companies face closure... Ispat jacks up price
By Ian Gooding
The ten companies making up the nation's Wire Rod Users Association, are seriously concerned about the future of manufacturing steel products in Trinidad and Tobago.
Effective September 1, from last Saturday, sole local supplier of wire rods, Caribbean Ispat Ltd, has announced an unprecedented 25 percent increase in their prices.
Wire rod is the feedstock used by downstream manufacturers for the production of such essential building materials as welded wire mesh (BRC), rebar, nails, drawn wire, and annealed wire.
Trinidad and Tobago became the leader in the Caribbean steel industry when local government constructed and commissioned Iscott.
Hundreds of millions of dollars has been invested into this sector, and the promise of foreign exchange and large scale employment was realised. Unfortunately Iscott would fall into financial hardships, and was eventually sold to the Ispat Group, an Indian-owned firm operating out of London, England.
Ispat has demanded a US$40 dollar per metric tonne price increase to all local consumers of wire rod. They have officially written local customers and demanded the increase from September 1, giving one week's notice.
The Association is at a loss as to what would justify such an increase, as world steel prices have remained stable.
The Association sought an explanation, but there has been no response from Mr Mittal, President of Caribbean Ispat Ltd, said Ramdath Ramsubir, director of Trinrico Steel and Wire Products.
"Such an increase would add considerable cost to local end users and especially our export market," he said.
"Trinidad is the largest supplier of steel products to the Caribbean. The industry provides millions of much needed foreign exchange to the country as well as provides thousands of jobs to its citizens.
"With international prices remaining stable, and such a demand placed on local manufacturers, Trinidad has found itself to be uncompetitive in their own market. Keen foreign competition from countries such as Turkey, Ukraine, France, China, and Brazil has resulted in a depleting Caribbean market share for our local manufacturers."
Ispat continues to demand US$290 per metric tonne from local manufacturers, but international prices remain at a maximum of US$225 per metric tonne, FOB Mill.
Ramsubir said the industry now faces the worst of fears with the export market being about 70 percent of local manufacturing, and with the imminent loss of this market, manufacturers must consider downsizing operations.
He said local down streamers consumed no more than five percent of Ispat's production, and was at a loss as to why the company that was welcomed and supported by the local manufacturers would find cause to treat them this way.
Not long ago the Ispat group was charged with dumping its products into the United States, he said. It is now considered that local prices are manipulated to defend against such charges when convenient. "With the new pricing structure it is only a matter of time until down streamers lose the entire foreign and local market to foreigners and one has to wonder why Ispat would reach the extent that they have," he stated.
Ramsubir said the Wire Rod Users Association must now look seriously at finding a foreign source for raw material. This would also result in loss of markets and income, but it is about survival at this point.
It is calling call upon their government and Prime Minister Patrick Manning to urgently intervene and help salvage what is left of the once promising Trinidad steel industry.
In 1994 both Central Trinidad Steel Limited and Caribbean Steel Mills had to take Caribbean Ispat to court to get a fair price on billets in line with international prices. The re-rollers were able to obtain judgment against Ispat and were awarded contracts with a pricing formula with a period of ten years which will end in a couple of years.
"After this has expired all hell will break loose again with regards to pricing of billets from Ispat," said Ramsubir.
Companies that utilise wire rods from Ispat include Trinmesh Limited, Trinrico Steel & Wire Products Limited, Reesal Industries Limited, Trinidad Nail Works Limited, Point Lisas Steel Products Limited, Varma Iron & Steel Co. Limited, Roopnarine Hardware Limited, Superchem Industries, Southern Steel Products Limited, Caribbean Steel Mills.
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