In recent update received SteelMint learned that, the Chhattisgarh government has extended rebate of INR 0.80 paise/unit, which got expired on 31st Mar 2019.
The government has extended this rebate till 31 Mar 2020, hence the benefit to the state based steel industries will continue for a year more.
With the announced rebate, the net power tariff charges for industrial units would be around INR 5.00-5.25/unit which was counted earlier near to INR 6.00/unit.
As per furnace owner’s in the state, with the postponed rebate their input cost of Ingot/Billets may be cheaper by INR 600-650/MT, considering about 800 units to make a one metric ton of hot metal.
On an average, the Chhattisgarh based standalone mills(including hot rolling mills) produce near to 5,00,000-6,00,000 MT of Ingot/Billet on monthly basis, in which about 60-70% material consumed within state, while remaining is sold to neighboring states.
It seems that as the plants already running below to margins, the postponed rebate on electricity tariff may not impact on price range. The average required conversion spread (margins) from Sponge P-DRI to Billet cited is about INR 11,500/MT (USD 160) which is currently hovering at INR 11,000/MT (USD 153) in Raipur.
Today, the trade reference prices in Raipur learned at INR 16,000-16,200/MT for Sponge P-DRI, INR 26,500/MT for Ingot, INR 27,100/MT for Billet & INR 30,400-30,700/MT for 12-25mm rebar, ex-plant & excluding 18% GST.
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