Eastern offers are attracting North Indian buyers, as the prices in Central India loose charm on account of power tariff hike. The new tariff scheme was announced in May, which is in effect from 1st June’15.
In Central India, owing to increase in power tariffs announced during the last week of May, has suddenly increased prices of billet. The prices have risen by INR 500-700/MT and current offers are at around INR 25,700-25,800/MT in Raipur. This hike resulted in loss of sales to other states.
In conversation with Mandi based buyers, SteelMint assessed that freight charges from Central India (Raipur & Bhilai) & Eastern India (Durgapur/Kolkata) to North India are equal. While the basic price of billet is now cheaper by INR 600-700/MT, if the buyer purchases from Durgapur as compared to Raipur. This has led to loss of buying interest in North from Central India.
Seizing the opportunity, the improved demand in eastern market in turn has resulted in improvement in prices of billet and they’re up by INR 200-300/MT. But the sponge iron prices have reduced sharply by INR 300/MT W-o-W.Billet offers in the domestic market are assessed at INR 24,500-27,500/MT (USD 380-430/MT) ex-works.
Scrap Based Markets Facing Difficulties
High cost of production and poor sales is posing as the biggest problem for manufacturers at present, mostly in scrap based markets.
Strong USD against depreciating INR is giving healthy costing if scrap-melters are buying scrap from the European countries. Availability of cheaper domestic scrap and sponge iron in the domestic market has shifted the interest of buyers.
Cost Calculation Approx
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Sponge Based Markets |
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| Markets | C-DRI (FeM) | Billet | Conversion Spread | Power Tariff | Units to be Consumed |
| Raipur | 17,000 (80) | 25,700 | 8,700 | 5.10-5.30 | 800-850 |
| Durgapur | 16,300 (78) | 25,000 | 8,700 | 4.80-6.00 | 800-850 |
| Rourkela | 14,800 (78) | 24,700 | 9,900 | 5.20 | 800-850 |
| Hyderabad | 17,000 (84) | 26,200 | 9,200 | 5.70-6.00 | 750-800 |
|
Scrap Based Markets |
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| Markets | Scrap | Billet | Conversion Spread | Power Tariff | Units to be Consumed |
| Mumbai | 20,700 | 27,400 | 6,700 | 6.30-6.50 | 650-700 |
| Gobindgarh (MGG) | 24,000 | 29,300 | 5,300 | 7.50-7.65 | 650-700 |
| Chennai | 18,400 | 26,200 | 7,800 | 6.00 | 650-700 |
All mentioned prices are basic and Ex-works
Prices as on 2 June’15
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