by Editor News
The slowdown in the auto sector has not only hit small manufacturing units and job work units but has also affected the Scrap Market.
The slowdown in production and reduction in orders has also reduced the demand for scrap. Scrap dealers say that the fall in demand has also reduced their income.
Manufacturing firms involve machining of raw materials which are made of mild steel, stainless steel or aluminium. This process involves generation scrap that is sold to the scrap dealers, who, in turn, sell it for recycling into raw material.
J James, president of the Tamil Nadu Association of Cottage and Micro Enterprises’ (TACT) said that according to the industrialists, since 1990s big industries that give raw material to be machined to micro and small job work units deduct the cost of scrap from the labour cost they pay per piece. Smaller units then sell the scrap and recover the costs. This helped them balance the costs. But now, with a fall in scrap prices, they have to face losses.
About six months ago, the scrap market bought stainless steel scrap from industries at a price of Rs 29/kg. This price has now reduced to Rs 20 to Rs 22/kg. Prices of cast iron and mild steel scrap have also come down from Rs 25 to Rs 15. Price of aluminium scrap has reduced from Rs 80 to Rs 40.
Automotive industries use steel castings for making components such as gears, gearboxes and valves. With the current drop in demand, the scrap prices have also come down.
James also said that a fall in the price of 1kg stainless steel scrap by Rs 9, the total loss occurred is of Rs 9,000 per tonne of output.
The business of scrap dealers has been affected a lot lately. V Palanisamy, a city-based scrap dealer said that earlier they used to trade around 50 to 60 tonnes of scrap a month, and now the number has gone down to 30 to 40 tonnes.
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