Optimal production of semi finish products shows sign of improvement in finished items.
Raw Material
Limited availability of Iron ore and increased export of Pellet make Sponge iron and Pellet Sponge costlier. During 1st Oct to 20 Nov 2013, a total of 419,800 MT Pellet was exported from India.
Raipur’s Pellet sponge prices increase by INR 600/MT and Sponge iron by INR 400/MT on W-o-W basis. However, other products (Ingot/Billet) moved up sharply by INR 500-800/MT respectively in a week’s time.
Scrap shortage built an additional pressure on manufacturers. In a week’s time, domestic Scrap prices in India moved up by 600/MT and INR 1,000-1,100/MT in a month. Meanwhile, imported Scrap CNF offers increased by USD 8-20/MT in a month.
Semi Finish:
Furnaces are suffering to run units as Sponge iron prices are high. This has resulted in production cut and price improvement of Ingot and Billet.
Raipur’s semi finish prices improved marginally owing to demand from Mandi Gobindgarh, Uttar Pradesh and Jalna. Last week, Billet was sold to Jalna from Raipur at INR 30,400-600/MT (delivered Jalna) and Mandi Gobindgarh at INR 32,200 (delivered Mandi).
Durgapur manufacturers are continuously selling Billet to Mandi Gobindgarh at around INR 31800/MT (delivered Mandi, advance payment). Market participants are of view that the scenario may improve in coming days if buying in Re-bar increases. Currently, demand from Bihar, Jharkhand, Uttar Pradesh and Assam looks good.
Hyderabad based manufacturers expect market to improve in coming days. Semi finish products are available in limited quantities as furnaces are shutting down. Also, shortage of Sponge iron, Pellet Sponge and Scrap support expectations of the manufacturers.
In general market sources believe if finish steel (Rebar) buying improves at current price we may expect another hike of INR 400-700 /MT. The raw material shortage and low semi finish production will keep the prices high. Otherwise, a constant demand will hold the prices and market will be firm.
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