Since the start of the year 2017, it has been quite promising for the steel sector as the prices have been continuously going up in line with the good demand across the country.
Notably, price difference between large and medium steel mills have narrowed down sharply. Generally there is a difference of INR 3,500-4,000/MT, which has narrowed down to INR 1,500-2,000/MT.
There are two prime reasons:
1. Acceptability of re-bars produced by mid/small mills in government projects
2. Increased re-bar production from large producers
The rising demand among the medium and small scale producers is because of the government permitting the medium and small scale producers’ material to be used in the big Infrastructure and construction.
This further stated that only good quality (Specifically BIS Certified material) should be encouraged rather than the material by large scale producers or by Medium/Small scale producers.
This encouraged the medium scale producers to increase the prices which have reduced the price gap between them and large scale producers.
Also, the ministry in National Conference stated that a cabinet draft should be initiated to promote and encourage growth of domestic steel industry; they also wanted that Indian-made steel should be given preference in government funded projects.
Sources: SteelMint Research
*Apr’17 prices are till 15th of the month
Ramp-up Production by the Large Scale Producers:
On analyzing the production by these integrated steel plants, which has gone up as in FY 17 (Apr’16-Feb’17) as compared to FY 16 (Apr’15-Feb’16) approximately by 5%, Y-o-Y; is one of the major reason in contracting the price gap between Integrated Steel Plants (ISP’s) and Mini or other producers.
Gradual increase in production have forced large manufacturers to sell material at competitive prices to attract end users as well to the government authorities.
Sources: JPC Data, SteelMint Reseach
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