The Chhattisgarh State Electricity Regulatory Commission (CSERC) issued a circular which showed that it is increasing variable charge adjustment (VCA) with effect from 25 December 2022. The power rate has been increased by INR 1.10/unit for all categories of consumers. These rates will be applicable for the consumption of electricity in December’22 and January ’23 and payable in the month of January’23 and February’23 respectively.
Standalone furnaces and hot-rolling mills (HRM) consume about 750-800 units to produce one tonne of billets while rolling mills consume around 100 units and sponge iron producers 60-80 units to make one tonne of material. So, this tariff revision will largely affect standalone furnaces and HRMs as their input costs were expected to shoot up by a minimum of INR 750-800/t.
It is pertinent to mention here that Raipur is the capital of Chhattisgarh state in central India and is a big hub of small and medium scale steel mills. It is a key supplier of steel to all major markets in India excluding eastern region.
After the revision of power costs, prices of sponge iron PDRI increased by INR 300/t and billets by INR 850/t in Raipur market within last two days due to active demand in finished steel and the effect of power outages. Going forward, the movement of sponge iron prices is expected to be largely dependent on billets prices.
Spot steel prices in Raipur as on 27 December 2022-
- MS Ingots at INR 45,900/t.
- Billets at INR 46,450/t.
- Rebars (12-25mm) at INR 50,000/t.
- Sponge P-DRI at INR 31,950/t and DR-CLO at INR 35,900/t.
Prices are ex-plant and excluding of taxes.
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