Predictably cracks are appearing in the long steel market in India after hibernating for almost 6 months. At long last the long product prices inched up by 1% during the week showing signals of turnaround post festivities. As the economy enters the penultimate quarter in the thick of seasonal consumption vibes of revival have led to price movements in an otherwise placid market.
Price hike of 1% within a span of 3 days propelled by strengthening of pencil ingot and sponge iron price is something to be reckoned with. Economy saddled in policy and political paralysis with monsoon session of the parliament washed out by the coal scam deluge it was time for some affirmative action by the government. Slew of economically prudent decisions gave traction to sagging market.
Post monsoon Q3 & Q4 is the period of economic activity picking up. Even though the industrial output has shown a meager 2.1% growth and the inflation has remained recalcitrant at 7.81% in August it does not write off turn of fortunes post festivities (3rd week of November). Non-reduction in lending rate notwithstanding by paranoid RBI construction activity is bound to pick up both in infrastructure and reality. Momentum has already been set with FDI in retail opening the floodgates for construction of retail outlets at a brisk pace in metropolis within the next 18 months. Please refer out article on14/10/12 “Long steel product market in for fireworks post pitra paksha in India”
Moreover with improvement in global scrap levels during winter will provide cost leverage to furnace owners to hike prices.
Coming 4 weeks would be preparatory for a sustained growth in buying after the culmination of Chaath festival with the labor force trooping back to the construction sites.
ILPPI - Indian Long Product Price Index
IFPPI - Indian Flat Product Price Index
INDSPI - Indian Steel Price Index
Change on 25th October as compared to 22nd October 2012
Change is in INR per tonne
Remarkable improvement in pencil ingot prices witnessed during the week has reflected in modulated increase in TMT prices bellwether of more theatrics.
Source - Strategic Research Institute