Morbi Ceramic Units
The demand for ceramics has reduced, forcing the Morbi ceramic units to cut production for the month of August. The shutdown has been announced by the Morbi Ceramic Industry in response to the recent increase in gas prices and the reduction in the demand for tiles in both the domestic and export markets.
The situation is very dire for the morbi ceramic units. There are a hundred units that have been closed in the last few months and another hundred are on the brink of closing due to the steep rise in costs. According to Mukesh Ughareja, former president of the Morbi Ceramic Association, the rise in input prices has caused overstocking and liquidity crunch.
While the paper industry in Morbi is relatively unorganized and under-reported, there are strong sentiments in favour of better organization and quality benchmarks. The paper industry in Morbi is also gaining strength and is expected to export a lot in the near future.
Morbi Ceramic Units to Cut Production For a Month
The success of the ceramic industry in Morbi has also affected the paper industry. The town has a total of around 350 corrugators, ranging from small to medium scale, which supply local ceramic manufacturers and watchmakers. These corrugators are mostly equipped with single-facer corrugation machines and produce between 35,000 and 40,000 TPM. One of the most important single-facer corrugator units in Morbi is Soham Papers Pvt.
Several companies are facing difficulties to meet gas demand in the industrial sector, including Gujarat Gas Ltd. The company is facing a problem in purchasing LNG, the key ingredient in gas supplies, which was at a high price in January. The price of LNG soared following the Russia-Ukraine war, making it more expensive for Indian companies to import it. As a result, some ceramic units have switched to LPG, which costs approximately 10 percent less than natural gas. Tile-makers also enjoy a set-off of 5% GST on LPG, which is not applicable on natural gas.
The cut was caused by the Government’s directive, which states that the gas supply must be prioritised and cannot be allocated to non-priority customers. This directive has affected industrial customers in South Gujarat. The gas supply to these customers will be reallocated to other customers, including 6 lakh households in that region. Currently, the Gujarat Gas Company Limited provides piped natural gas to over 900 factories in Surat. The company also supplies gas to over 400 units in Umbergaon, Valsad, and Vapi.
The rising cost of gas and the falling price of crude oil are taking their toll on Gujarat Gas Ltd, India’s largest city gas distributor. Increasing prices of gas and the decreasing spread between gas and crude oil are making alternative fuels more attractive. Several factors are driving up gas prices: Freeport LNG terminal in the United States is closing, the Nord Stream pipeline is set to undergo annual maintenance in mid-2020, and Norway’s pipeline is set to begin mid-year maintenance. In addition, most gas entering Europe from the US comes from the Gulf of Mexico, where hurricanes can disrupt shipping lines.
Prices of compressed natural gas have risen by as much as 37% in some cities in the past six months. This is a result of increased costs and profit margins for city gas distributors. Several companies, including Adani Gas, Indraprastha Gas, and Mahanagar Gas, have raised prices for CNG and piped cooking gas. During March, prices of CNG rose by an average of Rs9.6 per kilogram.
