Despite demand, companies reduced production by 20%, shortage of steel to make cars
If you are going to buy a car, you may get a long waiting in delivery. The reason is that car companies have reduced their production target from January to March. Car sales were up 24% in December. That is, despite the demand, companies have to reduce production. The Mahindra, Hyundai and Nissan cars are already under waiting for up to 10 months.
1.5 lakh less trains to be built from January to March
Actually, carmakers are not getting steel as per demand. According to a report, companies have reduced their production schedule by 15-20% for the January-March quarter. That is, about 1.5 lakh fewer vehicles will be built during this period. Some companies have reduced the shift timing in their plants. Due to the decrease in production, the dealers have only ten days remaining stock, which is the lowest ever.
60% to 70% of steel is being obtained as compared to the demand
The Society of Indian Automotive Manufacturers (SIAM) has sent a note to the Ministry of Steel. It states that steel companies are fulfilling 60% to 70% of orders. Therefore, the situation may worsen in the coming days. The industry body claims that the high export of finished steel is also one of the reasons.
Lack of semiconductors is also a big reason
Mahindra & Mahindra and component manufacturer Bosch have reported lower production in the first half of 2021 due to a shortage of semiconductors. It is not that only the passenger vehicle is being affected by this, the two-wheeler and commercial vehicle segment is also affected.
Steel has become costlier by 60% in a year Domestic steel prices have risen by 60% to Rs 57,250 per tonne in a year. On January 1, 2020, the price of domestic steel was around Rs 37,500 thousand per tonne. Prices have risen more rapidly since October. Hyundai, Mahindra and two-wheeler makers have also increased prices in January due to steel being expensive.
Auto sector’s share in steel consumption 15-17%
The auto sector accounts for 15–17% of India’s total steel consumption. Flat steel accounts for about half of the total steel production, and about a third of it is consumed in the auto sector. The cost of metal used in trains is 15–45% of the total price.
