Limited Demand Weighs on Primary TMT Prices

Price

• The prices of primary steel have dropped further by Rs 500/ton due to limited demand. The prices for major locations are as follows:
• Ex-Mumbai: Rs. 50,500-51,000/ton
• Ex-Delhi NCR: Rs. 50,500-51,000/ton
• Ex-Vizag: Rs. 49,000-49,500/ton
• The prices are for 12 to 32mm sizes, Grade Fe 550/550D and exclude trade discounts, as well as GST.
• Distributors across the North, West, and South have observed reduced prices from all primary mills. The above pricing reflects this trend.

Demand and Supply

• Due to the monsoon season, there is a noticeable decline in inquiries, indicating reduced market demand. As the monsoon season concludes, the market is expected to show trends in the upcoming months. Distributors are prepared to negotiate and have large inventories. There is significant negotiation as buyers anticipate further price reductions in the last week of August.

News

• The Supreme Court’s recent ruling on mining royalties could increase operating costs for Tata Steel and JSW Steel, as state governments may impose retrospective taxes. According to Fitch Ratings, Tata Steel might experience a 9% reduction in EBITDA and a 0.3x increase in EBITDA leverage due to these new taxes, compared to JSW Steel.
• Tata Steel’s accumulated contingent liabilities from Odisha stand at Rs 17,300 crore as of June 2024. JSW Steel, with smaller mining operations and shorter asset ownership, faces less impact. The ruling could also lead to higher electricity prices, potentially accelerating investments in renewable energy.

Expert’s Opinion

• Since all major mills are operating, supply and demand are not major concerns. The ESL Steel plant has resumed operations. There is an expectation that demand will rise in September. Due to the current lack of market demand, mills are willing to negotiate on price.