Iron Ore Decline Impacts Secondary Structures; Primary Market Faces Supply Challenges

Key Takeaways

• Primary Prices: SAIL up by Rs 750/mt, RINL up by Rs 1000/mt; supply tight due to IISCO plant maintenance and RINL’s round bar shortage.
• Secondary Prices: Declined across all regions; low demand persists but inquiries are picking up.
• Supply Issues: Heavy structural components like NPB and WPB are scarce, but RINL has resumed production to address shortages.
• Market Outlook: Falling iron ore prices in China pressure secondary prices; trading demand expected to recover soon.

Structure Prices

• Secondary market down in all region, Raipur down by Rs 500, Mandigobindgarh Rs 300, Durgapur down by Rs 600, Hyderabad down by Rs 600 and Chennai down by Rs 500.

• In primary market’s new monthly price revision, SAIL increased price of Rs 750/mt, RINL increased price of Rs 1000/mt and JSPL rates are rollover in this month.

• The offers for 100 x 50 Channel in the Secondary Steel market are as follows:

• Ex-Raipur: Rs 46,700/mt

• Ex-Hyderabad: Rs. 48,000/mt

• Ex-Raigarh: Rs 46,700/mt

• Ex-Chennai: Rs. 49,000/mt

• Ex-Mandi Gobindgarh: Rs. 48,100/mt

• Ex-Durgapur: Rs. 45,300/mt

• The offers for 100 x 50 Channel in the Primary Structural Steel market are as follows:

• Ex-Durgapur: Rs. 55,250/mt

• Ex-Chennai: Rs. 58,750/mt

• Ex-Hyderabad: Rs. 57,250/mt

• Ex-Ahmedabad: Rs. 57,750/mt

• Ex-Ghaziabad: Rs. 55,750/mt

Structure Supply and Demand

• Primary: The IISCO plant has been undergoing maintenance for 45 days, which manufactures heavy structures like NPB, WPB, and others that are in high demand throughout India and sold at premium prices. This has caused a major supply issue in primary materials. To help with the supply issue, the RINL factory has already restarted. Additionally, RINL is the only producer of round bars that are currently out of stock, although they should be delivered next month. The market is also lacking in the JSPL segment. Therefore, supply is a major issue in the primary segment.
• Secondary: Since secondary mills have adequate inventory for standard sizes, they are not concerned about material shortages. As the price of iron ore in China declines, the secondary market's potential will also decline in the days ahead. The secondary market is receiving inquiries as the market price declines, and the mills are now experiencing an inquiry closure as well. Secondary market trading demand is still low but will increase over the coming week.

Structure News

• China's ferrous metal smelting and rolling sector saw a 3.2% year-on-year growth in industrial output from January to October, slightly up from the previous period, according to the NBS.
• In October, the sector's output rose 4.0% year-on-year. Overall industrial output grew 5.8% year-on-year for the ten months and 5.3% in October, with a 0.41% month-on-month increase.

Expert Opinion

• This month, SAIL and RINL increased their prices by Rs 750 and Rs 1000 per mt, respectively, while JSPL rolled over the rates. To help with the structural requirement, the RINL facility has reopened. Pricing in the primary market is unstable, and distributors are charging premium prices based on supply. Amid the continued decline in trade demand, secondary market prices are decreasing as a result of iron ore price decreases.