Aarti Chandran, a middle class housewife in the western Mumbai suburb, replaced all her utensil and cutlery products at a fresh investment of around Rs 10,000. Reason: the utensils and cutlery items that she had bought barely six months ago started rusting, despite being claimed to be of stainless steel.
Many housewives like Aarti are habituated to change their kitchen materials almost every six months. Record high nickel price two years ago forced unorganised sector players to use less, making kitchen materials less durable. Before the nickel price hit a record high of $54,000 a tonne on the benchmark London Metal Exchange in 2007, the metal’s use in stainless steel industry was ranging between 6 per cent and 8 per cent of the total raw material content.
However, producers gradually reduced its use to ‘nil’ in order to protect margin. Consequently, utensils such as glass, plate and bowl produced largely by unorganised sector players start breaking in six months. Nickel price slumped to $13,000 a tonne early last year, recovering again to trade at $21,923 a tonne. The metal price fell 24 per cent from the peak of $29,000 late February. But, nickel’s use remained between 6 per cent and 8 per cent by branded utensil manufacturers and exporters like Varun Industries, said Kiran Mehta,CMD of the company.
The company currently produces utensils using 2 million tonnes of 200 series stainless steel and plans to set up a backward integration facility – a two million tonnes flat steel unit – at an investment of Rs 800 crore at its existing sheet manufacturing plant in Jodhpur, Rajasthan. The plant is expected to commence commercial production in 2013.
“This backward integration project will reduce our dependence on the market for procuring flats,” said Kiran Mehta, chairman and managing director of the company.
Stainless steel is a versatile material. Unorganised sector players which constitutes nearly 70 per cent of India’s stainless steel production change their raw material mixes depending upon volatility in prices. But, as and when 400 series – nickel free – of stainless steel is introduced, it will grab a larger market share. Nickel-free stainless steel is the future, said N C Mathur, president of the apex trade body, Indian Stainless Steel Development Authority (ISSDA).
Being the major branded utensil manufacturer and exporter and the only list company on equity exchanges, Varun Industries’ never reduced nickel uses in stainless steel. Because of high nickel prices, the company’s margin was badly hit, said K Rathnakar Hegde, Group Advisor of the company.
Meanwhile, India’s stainless steel industry may have 1.3 million tonnes of surplus output by the end of next calendar year on the back of massive capacity additions by domestic producers.
Total production is estimated to surpass four million tonnes by the end of 2012 against the anticipated consumption of 2.6-2.7 million tonnes. Consumption, however, is expected to decline further, due to the slowdown in infrastructure development. India’s current per capita consumption of stainless steel is 1.2 kg. The industry target is to double consumption levels in the next two-three years.
Dilip Kumar Jha / Mumbai June 29, 2011, 0:55 IST