SteelMint learned that there are 4 major reasons that indicates market will stabilize or increase from this intensity; no hope for major correction
1) High Prices of Raw Material
a) Restricted supply of Iron ore from Odisha, mainly due to 50:50 rule results in rise of Sponge iron prices
b) Rising Scrap prices in domestic market owing to low imports and increased Sponge iron prices
2) Seasonal Demand: However, manufacturers claim that Finish Steel demand is still subdued and will take some time to pick up. Although, with escalation in prices of raw material it seems steel prices should sustain in short term.
3) Primary Producers raise Steel prices: Primary Producers (SAIL& JSW) is likely to raise their steel prices for February, 2014 by INR 500-1,000/MT. That will also support to other manufacturers.
4) New VAT implementation in Punjab: Steel prices have shot up to INR 1,000/MT in Mandi Gobindgarh in last few days, which is considered to be the benchmark for secondary steel players. Sources said that the government had introduced new VAT structure for steel manufacturers in the month of January 2014, which was applicable from 1 Feb, 2014. This has resulted in fresh buying as VAT has been reduced from 4.5% to 2.5%.
Prices in INR/MT as on 03 Feb, 2014
|
Place |
TMT 12 mm |
W-o-W |
Ingot |
W-o-W |
Sponge |
W-o-W |
|
Mandi Gobindgarh |
37,500 |
800 |
33,700 |
800 |
23,200 |
500 |
|
Rourkela |
33,250 |
250 |
29,650 |
850 |
19,200 |
450 |
|
Durgapur |
33,700 |
– |
30,650 |
250 |
20,500 |
100 |
|
Raipur* |
34,100 |
500 |
30,400 |
700 |
21,200 |
700 |
|
Raigarh |
33,400 |
– |
30,100 |
600 |
20,000 |
350 |
|
Mumbai* |
35,800 |
100 |
32,300 |
100 |
– |
– |
|
Hyderabad |
35,500 |
500 |
31,800 |
300 |
– |
– |
Basic Prices
Excise duty @12.36%; VAT as applicable
*Payment next day
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