Indian TMT manufacturers are likely to be in the soup as raw material prices have fell suddenly by INR 500-700/MT and finish demand is getting low day by day.
Market players were of the view that market may be stable. However, it seems that TMT prices may decline further as falling raw material prices are creating selling pressure on TMT manufacturers.
SteelMint assessed, the major reasons are:
1. Falling Raw Material Prices: TMT manufacturers believed that TMT prices will not decrease until raw material prices are stable. But, Sponge iron & Ingot/Billet prices have dropped suddenly by INR 500-700/MT.
2. Elections: The elections will begin on 07 Apr, 2014 and end on 12 May, 2014. With the final dates being announced, the model code of conduct has also begun in the country from 05 Mar, 2014. There are no new projects because of Lok Sabha Elections as well as all government’s construction bills will not be passed owing to code of conduct.
3. Festival ‘Holi’: Holi affects the steel market for at least a week. It will halts transporting of material, loading & unloading as plants shutdown in these days and also there will be low availability of labours that stops the construction activities.
4. Fewer Projects led to Low Demand: TMT demand in the steel market is not picking up from a long time and construction activities are low owing to fewer projects.
5. Low demand in Retail Level: Retail demand also slow down owing to high interest rate and high building material cost.
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