The 16-20% hike in Chhattisgarh’s power charges has led to rise in MS ingot/billet prices by INR 400/MT in last two days and may increase production cost by INR 600-800/MT in near-term.
MS ingot/billet prices have gained momentum by INR 400/MT in last two days owing to recent hike in power tariff by 16-20% in Chhattisgarh (central India). SteelMint in conversation with induction operators based in Chhattisgarh assessed that production cost of the material is likely to increase by INR 600-800/MT post the new power tariff becomes applicable, wef 1 June’15.
In domestic market, MS billet prices remained volatile by INR 200-500/MT; trading at INR 24,700-27,700/MT (USD 385-435/MT). Currently in Raipur, the material is being offered at INR 25,500/MT (+350), Durgapur at INR 24,800/MT (-250), Mumbai at INR 27,700/MT (+500), Hyderabad at INR 26,000/MT (-500) and Chennai at INR 26,500/MT (-300).
Sources across India reported that at present, production of semi finish & finished long has fallen by about 20-30% owing to peak summer season. Power supply is the current major concern in steel industry and most of the manufacturers are facing the problem all May.
Meanwhile, mill operators reported to sell the material in limited quantities. Some operators have closed their sale as buyers are unwilling to purchase the material at high rates. In addition, they mentioned that rebar production cost may increase by INR 200-300/MT in coming days.
Global Billet Market
It is heard that imported billet is coming in small quantities from South Africa at about USD 375-380/MT, CIF Nhava Sheva in containers. Current offers for Chinese billet are assessed at USD 370-375/MT, CIF India. But, Indian importers prefer to stay away from imported material due to BIS norms made mandatory.
High Prices may not Persist for Long Duration
RINL, which had floated an export tender for 125,000 MT bloom of grade IS2830 Gr with closing date on 25 May’15, has received no response with no bid. As a result, it is anticipated that primary producers may reduce prices in coming days in order to compete with secondary steel offers. This in turn will further pressurize secondary players.
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