By Our Correspondent
BHUBANESWAR: Odisha government estimates a revenue loss of Rs 10,000 -15,000 crore in the current financial year as the state faces a severe disruption in industrial activities due to coronavirus lockdown and a cyclone that hit its shores recently. Barring the liquor bottling plants, most of industries are operational now.
Of course, their operations are not at the pre-COVID levels, but Government have ensured that all issues related to labour, raw material and product movement are dealt with on a priority basis.40 per cent of MSMEs have also started operations in the state. The state government has started campaigns to help MSMEs avail benefits announced by the Centre. It is organising camps, where bankers and MSMEs are brought together and the latter are persuaded to apply for the central government schemes.
“Our MSMEs are intermediate SMEs – they produce sponge iron, pig iron or induction furnace or induction arc furnace – so they are depended on larger product market in Western, Southern and North India. Unless demands pick up in Maharashtra, Gujarat and Punjab, it would be difficult for our SMEs to come back to pre-COVID levels,” an official said.
On the basis of feedback from SME associations, it seems some industries, which are directly dependent on the Western and Northern final product markets, will find it very difficult to come back to business. The government has ensured that any pending payments to the industries from state departments is cleared immediately.
“We did a quick survey and found that about Rs 450 crore was outstanding as on March 1, 2020. In April and May, we started a drive to clear all these dues and within this period the outstanding has come down from Rs 450 crore to Rs 85 crore. This Rs 85 crore is also due to some or other disputes, which we are trying to clear,” he said. The state government has also ensured that all bank guarantees and earnest money deposits were released in April.
In terms of hand-holding, the state government coordinated with other states so worker and product movements continue to happen, and the industries continue to get their logistics support.
Commercial iron ore producer and others are set to benefit from a surge in global seaborne iron ore prices. The rally in iron ore prices stems primarily from the supply crunch in Brazil, which is still coping with the spike in Covid-19 cases and will calm the frayed nerves of iron ore miners in India at a time when domestic demand has gone downhill.
International iron ore prices are now trending over $100 per tonne, clocking a year-on-year (YoY) gain of 10 per cent. The revival of Chinese steel production has bolstered demand for the key steel making ingredient. Simultaneously, disruptions in Brazil after soaring Covid cases has crimped supplies, raising prices.
Brazil is the world’s second largest iron ore exporter. But its exacerbating Covid-19 crisis with a count of over 600,000 cases has triggered worries on supplies. Top Brazilian producer Vale has pruned its 2020 iron ore production guidance from 340-355 million tonnes (mt) to 310-330 mt. The rapid spread of Coronavirus cases in Brazil and rising infections among workers had precipitated fears of mining activity getting curtailed even though mining has been categorised as ‘essential service’.
But China, the originator of the virus, has seen a swift rebound in its steel output. Demand for iron ore in China is expected to stay robust as the country would see a strong recovery in steel production. The recovery in China spells favourably for exporters as China makes half of the world’s steel and has a whopping share of 70 per cent in global seaborne trade. At major ports in China, iron ore inventories are tapering. Iron ore prices are currently trading at a 52-week high on the Dalian Commodity Exchange in China.
Export demand will perk up Indian merchant iron ore miners. China has shown renewed appetite for absorbing iron ore. The supply crunch in Brazil is unlikely to be stabilised for the next two to three months. This offers a huge opportunity for merchant producers to scale up their shipments. Both NMDC and the big merchant miners in Odisha stand to gain from the rally in iron ore prices.Moreover, the non-resumption of mining activity from merchant leases in Odisha after auctions has magnified the supply woes. Nineteen iron and manganese blocks whose lease tenure lapsed on March 31, could not restart production as some formal approvals were still pending from the state government.
