Indian steel prices by Medium & Small mills have been witnessing consistent rise from the past one week and on an average the price surge were near about INR 1,500-2,500/MT (USD 21-37) for Sponge iron & Billets. In context to Finished steel the price surge closed to INR 2,000/MT (USD 29), supported by strengthening Sponge & Billet prices.
However as the Rebar demand average seasonally, the market participants feel that the current prices of Semis may not sustain for long term and are likely to be report some corrections. Rebars consume major proportionate of produced Ingot/Billet in the country – more than 60-70%.
Factors mentioned below, how the prices were on the rise even though the inquiries for the finished products were average. The large steel mills recently have further cut their long steel – Rebar prices by INR 750-1,250/MT for Aug’18 deliveries.
Seasonal low supply of sponge iron: Sponge iron supply by major merchant suppliers had fall due to less production utilisation on ongoing heavy rains across the country.
The major suppliers in Raipur, Durgapur & Rourkela who leads the sponge iron market have stated reduced supply due to falling production as well rise in captive consumption. Also, the suppliers in South India, Karnataka stated better demand as anticipations are high for strengthening prices in near term.
Dip in margins of EA or Induction furnaces: As the conversion spread was bottomed line and prices of Sponge iron spurt, the Ingot/Billet producers didn’t have option other than to increase their prices in line to maintain average conversion spread (margins).
The current conversion from P-DRI to Billet is hovering at INR 12,000/MT in Raipur & Durgapur which is similar before to price rise. Hence, the prices surge majorly to secure margins not largely on demand prospect, stated by Industry experts.
Improved Overseas Demand: Export demand for overall Semis products i.e. Sponge iron, Billet & Pig iron improved since the prices reached low levels as many tenders got concluded frequently through the private & government owned mills.
In last few days, Vizag Steel (RINL) has concluded its Billet export tenders. Also Neelachal Ispat (NINL) – India’s largest producer of Steel grade pig iron, has concluded its couple of export tenders via MMTC for about 40,000-50,000 MT Pig iron.
The re-rollers in Nepal being actively participate and have booked good volumes of Induction grade Billets in East India, which dispatches currently in pipe-line.
Sponge iron export deals reported in last week at around USD 345-350/MT CFR Chittagong. The producers in East & South India, stated near about 8,000-10,000 MT Sponge iron have been booked for Bangladesh.
Depreciation of Indian Rupee: The Indian rupee has been on down trend against US Dollar since mid June. The currency fluctuated to its lowest and is trading in and around at 68.5-69.0 rupees against a dollar.
Thus with weakening Rupee, Imports of Raw & Finished products remain costlier, which has resulted in increased focus in exports too.
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