In Week 15, Indian Billet market has witnessed a sudden fall in prices owing to expected improvement in availability of imported Scrap & Iron ore. Meanwhile, supply of Billet & Bloom from primary manufacturers has increased due to weak global market, which in turn has affected the secondary market.
For instance, JSW is offering Billet at around INR 27,000/MT (delivered to Hyderabad) from its Vijayanagar plant. While, NINL’s Billet offers are in the range of INR 24,500-24,700/MT (ex-Cuttack). Similarly, Steel Authority of India (SAIL) & Vizag Steel are putting good quantity of Billet/Bloom on auction.
Lower realizations in the global market has forced Indian large manufacturers to push it in the domestic market. For instance, Vizag Steel’s some of the previous Billet/Bloom export tender were deferred on account of lower bids. Last RINL’s export tender for 10,000 MT Billet and 80,000 MT Bloom was sealed at USD 370/MT for Bloom and USD 405/MT for Billet, FoB Vizag. At these prices, net sales realization for Billet will be around INR 24,500-25,000/MT, whereas, domestic realization would be INR 25,500-26,000/MT.
Vizag Steel’s (RINL) has also floated another big export tender of 110,000 MT Billet/Bloom with deadline till 28 Apr’15. This export tender is likely to set the market direction.
Bearish Market on Steel Prices in Coming Weeks
At present, market participants are bearish and anticipating that Iron ore dispatch is likely to improve over resumption of Mines in Odisha under new MMDR Act. In the fiscal FY15, Iron ore production had fallen by more than 36% due to closure of mines.
Meanwhile, Indian buyers are skeptical looking at continuous fall in prices. Moreover, they have postponed major buying and plants are running in hand to mouth condition.
Chinese Exporters offer Billet at USD 370-375/MT, CIF India
Currently, import offers for Commercial grade Billet are assessed at USD 370-380/MT, CIF India from China and USD 400-410/MT from CIS nations.
Current Billet & Sponge Iron Prices with Conversion Spread
| Particular | Billet Price | W-o-W | C-DRI Price | W-o-W | Conversion Spread |
| Ex-Mandi Gobindgarh | 30,900 | – 500 | 21,000 | 0 | 9,900 |
| Ex-Durgapur | 27,500 | – 400 | 18,250 | + 150 | 9,250 |
| Ex-Rourkela | 26,300 | – 200 | 17,000 | – 50 | 9,300 |
| Ex-Raigarh | 26,600 | – 400 | 17,550 | – 450 | 9,050 |
| Ex-Raipur | 27,000 | – 500 | 17,500 | – 400 | 9,500 |
Prices in INR/MT
Source: SteelMint Research
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