The total trading volume recorded by SteelMint’s daily Raipur billet index in May’21 stands at 94,450 t, slightly lower than over 0.1 mn t in Apr. Through the month, induction route billet prices came under pressure due to weakening demand from re-rollers. Prices slumped not only in central India but also in other major markets of the country. However, stiff raw materials prices are expected to limit further fall in billet prices, as per SteelMint assessment.
Index trends lower
Domestic sponge iron offers increased by INR 300-1,500/t across locations on 11 May triggering a surge in billet prices by INR 200-1,000, with major hikes in the range of INR 900-1,000/t witnessed in Raipur, Jalna and Hyderabad. The index rose again to INR 43,700/t, exw Raipur, on 15 May as local suppliers raised billet offers on anticipation of shortage in the market due to suspension of power supplies by Jindal in Chhattisgarh’s Raigarh.
However, in the course of just five days, the index fell to INR 41,200/t, exw Raipur, on account of limited bids. A majority of re-rollers including rebar producers based outside Raipur retreated from the market today due to prevailing bearish trends and subdued finished steel demand. This was followed by the index sliding further to INR 40,200/t on 27 May – the lowest in over one and a half months.
However, recovery soon followed with improving iron ore and steel futures in China in the last week of May, which fuelled demand allowing billet producers to raise offers. Trade volumes rose to 7,800 t on 28 May, as per SteelMint data. The index rebounded on optimistic global trends, especially rising steel prices in China alongside an expected hike in steel prices by the primary mills in the country.
Price outlook
The weighted average price for billet (100x100mm) was assessed at INR 42,246/t, exw Raipur, in May’21, compared to INR 41,392/t in the previous month. The index rallied in the beginning of Jun on sharp rise in bids at OMC’s lump ore auction and market participants believe that iron ore prices will probably remain strong due to seasonal factors, not to forget the impending expiry of key merchant leases in Odisha in Aug’21. Strong export demand for pellet and high prices are likely to arrest further decline in sponge iron prices and the index is, therefore, unlikely to fall further.
Weak demand for construction steel during the monsoon months is expected to weigh on billet prices. Trading activity continues in a low key at present. Standalone furnaces in Chhattisgarh’s Punjipathra industrial area resuming production is also expected to increase supplies in the coming days thereby pressuring prices further.
Billet index
SteelMint’s daily billet index records transactions and offers by both Raipur-based players as well as billet producers from other key markets such as Odisha, Punjab, Maharashtra, Gujarat and Hyderabad. It provides a precise and mathematically accurate assessment for traders through rigorous deal-by-deal monitoring of billet price movements.
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