The long product market has been languishing for the past 1 month. The volatility has left operators gasping for semblance of order and certainty. However it is expected that if not for demand but certainly for the hike in input cost, a phase of revival might be on the cards.

Although cost push revival is not new which has been playing a stellar role in setting the tone for speculative buying giving the market temporary reprieve. Be it for scrap, coking coal or iron ore each one has played cohesive role in the revival of long product market recently.

Recently it has been learnt that Coal India Ltd has hiked notified prices for all non power consumers for coal grades C to G by 30%, except for non power consumers of Mahanadi Coalfields where the price hike is between 42% and 60% and for grades A and B for all consumers by 73% to 188% and 88% to 218%, respectively

The hike is going to significantly hike the cost bill for most of the sponge iron manufacturers as they prefer to use A and B grades.

Sponge iron, being a key ingredient for the manufacture of pencil ingot, consumes nearly 1.3 tonne of coal for each tonne of output. Hence conclusively it can be said that the impact will have a passing effect in the coming weeks on the prices of pencil ingot and finished steel.
Pencil Ingot prices has typically been on a volatile course off late but with this cost escalation a brief period of revival is certainly on the cards.

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