Domestic Long steel makers, who contribute approx 40% in the country’s total crude steel production, are under pressure. High production cost, surge in inventory and poor off-take of produced material are posing to be the biggest problems for manufacturers. This in turn is forcing steelmakers to shutdown their mills for a specific duration.
Demand in the domestic market has been subdued since a pro-long time. As a result, billet and rebar prices have declined sharply by INR 1,000-3,000/MT and INR 1,000-4,000/MT M-o-M. While, a slight price correction of INR 500-1,500/MT has been witnessed in sponge iron major markets in a month.
Sourced reported that in order to produce MS billet, scrap based markets use 70-75% scrap and rest sponge iron. While, sponge based markets melt 80% sponge and remaining mixture of pig iron and scrap. SteelMint learned from market participant billet producers are desiring an average conversion gap of INR 9,000-9,500/MT from C-DRI to billet, which is currently at INR 7,500-8,800/MT.
Tentative Cost Calculation
| Sponge based Markets | |||||
| Markets | C-DRI (FeM) | Billet | Conversion Spread | Power tariff | Units to be Consume |
| Raipur | 15,500 (80) | 22,800 | 7,300 | 5.25-5.50 | 800 |
| Durgapur | 14,700 (78) | 22,400 | 7,700 | 4.90-5.10 | 800 |
| Rourkela | 13,500 (78) | 22,300 | 8,800 | 5.20 | 800 |
| Hyderabad | 16,600 (84) | 25,300 | 8,700 | 5.70-6.00 |
700-750 |
|
Scrap Based Markets |
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| Markets | Scrap (HMS) | Billet | Conversion Spread | Power tariff | Units to be Consume |
| Mumbai | 17,500 | 24,100 | 6,600 | 6.30-6.50 | 650 |
| Gobindgarh (MGG) | 19,400 | 25,200 | 5,800 | 7.50-7.65 | 650 |
| Chennai | 17,800 | 25,450 | 7,650 | 6.00 | 650 |
All mentioned prices are basic and ex-works in INR/MT
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