Long product market in India typically has always remained shrouded in mystery with streak of antithesis at any point of time. Undeniably it had its share of undulation mired in uncertainty.
Gargantuan demand from the infrastructure, housing and reality sector remaining untapped kept it unflagging in the depths of recession. Conversely policy paralysis and credit tightening took toll of the buying in short term.
In the last couple of months Indian mills and the secondary sector have been dauntlessly hiking price sniffing opportunity with INR hurtling down despite the global levels remaining sketchy. Realism is the calamity in such deceptive phases when pundits err to believe demand pickup.
Mosaic of factors from the flip flop in scrap levels to the scarcity of iron ore and sponge iron has kept the production cost obdurate. Ironically the furnace owners have not re-adjusted prices the other way in case of correction. Understandably the confidence emanates from a captive market held ransom by the currency insulation.
Delving in the history one comes face to face with startling revelations of the current TMT bar levels at sniffing distance from the soaring heights of pre-recessionary era.
Location: Mumbai
Pencil Ingot
| 1st July 08 | 1st Feb 12 |
| 35800 | 33600 |
In INR per tonne
(Exclusive of all taxes)
Rebar TMT/QST
| 1st July 08 | 1st Feb 12 |
| 47600 | 44900 |
In INR per tonne
(Inclusive of all taxes)
(Source: www.steelprices-india.com)
The differential is the margin of the furnace owners which has taken hit of INR 1500 per tonne on head to head basis. Understandably the rigors of raw material and power shortage have eroded the margin of furnace owners who are sitting on the edge with margin of INR 4000 per tonne.
No wonder the re-rollers have been pushing the prices up in the last couple of months adding INR 1500 per tonne before the import hits. “Heightened Equilibrium” would be apposite elucidation of the market condition today which is a compulsion to some extent.
Situation is not so gory with the primary manufacturers who still have some cushion from the on-going projects racing for completion with the closure of financial year. With a mark-up of INR 5000 -5500 per tonne over the secondary material they are all set to eclipse the peak of 2008. Moreover recent shortage of supply from these mills has kept the levels afloat.
With Indian Rupee having appreciated by 6% over a month and international long product prices having corrected by USD 40-50 per tonne import bookings are just a furlong away.
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Products covered
1. Input materials - Iron ore, scrap, sponge iron, pig iron pencil ingot, billets and blooms
2. Long products - Rebar, wire rod, angle, channel and joists
3. Flat products - Narrow plates, wide plates, HR, CR and galvanized
4. Others - Pipes
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(Sourced from www.steelprices-india.com)
