Increasing raw material prices are building pressure on manufacturers to hike TMT Re-bar offers despite of sluggish demand.
Why Raw Material Prices rising Suddenly?
The Supreme Court’s order for suspension of 26 mines has created circumstance of material shortage in the market, although there is no shortage right now. But, eyeing to coming days, market players have raised offers. Iron ore shortage will increase in future that will not let raw material prices to be soften.
Increased Ingot prices in Mandi Gobindgarh have also raised the offers of most of the cities.
“Durgapur & Rourkela supplies Ingot & Billet to Mandi, but due to suspension of 26 mines, supplies have declined. Decent demand in local market and low buying from supplier states have increased Ingot prices in Mandi,” said a trader based at Mandi.
MS Ingot offers moved up by INR 500-800/MT in major cities which led to increase in TMT prices as well.
Is TMT Manufacturer Comfortable on High Prices?
Indian TMT manufacturers are in irresoluteness as raw material prices are on high track, while TMT demand is sluggish across the country.
Boom in Ingot offers and standstill TMT demand are squeezing conversion margin which may pull down the production in near future.
“We are receiving only 25% of routine demand on raised prices. In case of its continuation, we have to cut our production as overstocking will be not affordable by us”, said a TMT manufacturer based at eastern region where TMT rates rose by INR 800-1,300/MT in a day.
Secondary TMT market witnessed price hike by INR 300-1,300/MT today.
Primary producers are also likely to increase the prices further by INR 500-700/MT as Tata Steel & SAIL are the primary mines that are included in the list of 26 mines.
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