Ferro silicon industries in the country are experiencing one of the worst slowdown in their businesses with most of them contemplating closing shop.
A combination of several factors both in the international and domestic market has led to a slack in their business.
With the Chinese economy slowing down, its domestic demand for steel has dropped significantly forcing steel manufacturers to focus more in the international market including India.
General Secretary of the Association of Bhutanese Industries Jochu Thinley said the Indian market is today saturated with cheap Chinese steel thereby crowding out Bhutanese Ferro silicon industries.
An industrialist requesting anonymity, over the telephone said, he hasn’t been able to sell anything at all in the last three months.
Most of those involved in the business said they are holding on to excess idle stock. Jochu Thinley said, most industrialists are able to sell a maximum of only 20 percent of their total production today.
Besides the slowdown in the Chinese economy, the revision in electricity tariff that came into effect early 2014 has also severely impacted their business. Industrialists said the revision was costing them about Nu 20M a year.
If the current situation continues till next month, industrialist said, they would have to close their businesses. Jochu Thinley said most industries are in the process of cutting cost, but if the situation continues, then alternative means has to be looked at.
He also said said fiscal incentives provided by the economic development policy to the industries that were established between 2004 and 2009 has also expired last December.
The president of the association Sonam Tobgay said it wasn’t only the Ferro silicon industries that are facing a difficult time. The slump in economic growth rate since 2013 has led to a drop in aggregate demand and has affected most of the industries.
“The only industries that were not affected are the tourism and mining industries,” the president said.
He said industries must weigh between closing shop and continuing their business. Closing their business down will also cost them significantly since most of them have huge obligations toward financial institutions.
Local economists said if the industries close down, it would also lead to job loss and affect government’s revenue collection besides impact on the financial institutions.
There are around seven Ferro silicon industries in the country today.
