Central and east India based MS billet manufacturers are likely to reduce offers further to book sales in volatile market.
Chhattisgarh, West Bengal and Odisha are the major semis steel producers. Out of the total production, about 50-60% material is produced in these states and supplied to Indian market. Manufacturers based in these regions are currently tussling with low conversion cost and increasing selling pressure.
Market participants complained that value chain of steel is disturbed as billet prices have corrected sharply by INR 2,000-2,800/MT. While, sponge prices by INR 1,500-1,800/MT. As a result, conversion spread from sponge iron to billet has narrowed down.
Conversion spread from sponge iron to billet
| Particular | Current Billet Price | Current C-DRI Price | Current Price Gap | 1W Price Gap | 2W Price Gap |
| Raipur | 22,000 | 14,500 | 7,500 | 7,800 | 8,200 |
| Rourkela | 21,250 | 13,250 | 8,000 | 8,300 | 8,400 |
| Durgapur | 21,500 | 13,400 | 8,100 | 8,850 | 8,800 |
Basic prices in INR/MT; ex-works
Source: SteelMint Research
Sources also anticipate that if demand will remain sluggish, the manufacturers left with no option but to curtail production to match demand and supply.
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