Forgings production up 71% YoY: Industry body

The Association of Forging Industry today released the performance figure for 2009-2010 and said overall production of forgings has increased to about 1.8 million tonne in the year from 1.05 million tonne in 2008-2009, registering a growth of over 71 per cent.

The association also said that capacity utilisation has increased considerably and expected to reach 3 million tonnes by March 2011.

This is a result of several industry initiatives including capacity expansion, modernisation, cost rationalisation, coupled with a revival in demand from the automotive sector and particularly the passenger car segment which recorded an excellent growth.

While the automotive industry is the main customer for forgings, the industry’s continuous efforts in upgrading technologies and diversifying product range have enabled it to expand its base of customers to emerging sectors including aerospace, energy, oil and gas and heavy engine parts.

In spite of registering an upswing in sales, the industry still faces a lot of concerns including increased cost of forging quality steel, high energy consumption, inefficient economies of scale, inadequate backward/forward linkages & overseas marketing support facilities, with rising steel prices leading the list of concerns. Steel prices in India still remain out of sync with international prices.

There is a critical need to bring transparency in steel pricing by aligning to a weighted index of prices of essential inputs for steel making, such as iron ore, coking coal, melting scrap and Ferro alloys.

To overcome the concerns of rising steel prices, the association feels that the government should take steps including banning export of steel or imposing export duty to act as deterrent; banning export of iron ore from India or imposing duty; reduce import duty on coke and other raw material for steel making.

The market potential continues to grow for the forging industry. Looking at the overall long term picture, the vehicle industry seems well poised to maintain a remarkable growth rate.

This industry is likely to post over 25 per cent higher than the last year’s production. The Auto Industry’s growth in 2009-10 was 25.76 per cent over 2008-09.

The first half of 2010-2011 indicates even better performance.

This will require the production of the Indian forging industry to shift into higher gear to cater to an expected surge in global demand and in the domestic automotive sector apart from upcoming projects in energy – especially in the Nuclear application.