Primary Structure Market Remains Disrupted Due to IISCO Maintenance; Secondary Market Largely Stable

Key Insights

Price Increases in Primary Market: SAIL raised prices by Rs 750/mt, and RINL increased prices by Rs 1000/mt due to ongoing supply issues and high demand for structural steel.
Supply Shortages in Primary Market: The 30-day IISCO plant maintenance and the lack of RINL round bars are causing significant supply disruptions for key structural steel products.
Secondary Market Stability: Prices in the secondary market have remained stable in most regions, with small reductions in Mandigobindgarh and Durgapur, but still showing limited demand.
Price Decline in Raw Materials: The drop in iron ore prices in China is affecting the secondary market, reducing the potential for price hikes in the near term.
Increased Demand for Certain Grades: Demand for certain structural steel grades, such as larger beams and NPB, remains strong, despite supply shortages in the primary market.

Structure Prices

Secondary Market: Mandigobindgarh down by Rs 300; Durgapur down by Rs 200; Raipur, Hyderabad and Chennai stable.

Primary market: In the 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.

Current base prices:
Rs 55250/- (Ex Durgapur)
Rs 58750/- (Ex Chennai)
Rs 57250/- (Ex Hyderabad)
Rs 57750/- (Ex Ahmedabad)
Rs 55750/- (Ex Ghaziabad)

Secondary prices:
Raipur : Rs 46700/-
Hyderabad: Rs 48000/-
Raigarh: Rs 46700/-
Chennai : Rs 49000/-
Mandi Gobindgarh - Rs 47800/-
Durgapur - Rs 45100/-
Base price for 100x50 channel

Structure Supply and Demand

Primary:
The IISCO plant is under maintenance for 30 days. It 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:
Secondary mills are not worried about shortages of materials because they have enough inventory for conventional sizes. However, there is a shortage of raw materials for new stock. The potential of the secondary market will decrease in the coming days in tandem with the drop in the price of iron ore in China. As the market price drops, the mills are now seeing an inquiry closure, and the secondary market is getting inquiries. The demand for secondary market trading is still minimal.

Structure News

China’s real estate investments fell 10.3% year-on-year to RMB 8.63 trillion in January-October. New commercial real estate sales dropped 15.8%, while construction activity fell 12.4%. The prosperity index rose slightly to 92.49 in October.

Expert Opinion

This month, JSPL rolled over the rates, while SAIL and RINL raised theirs by Rs 750 and Rs 1000 per mt, respectively. The 45-day maintenance time for the IISCO facility and the severe lack of plant supplies for large beams/NPB that are sold at high prices are the causes of the supply issue. Since RINL round bars are produced by a single manufacturer, they are not available on the market. Due to the inaccessibility of key structural components, the price of the JSPL segment also experienced a significant increase last month. The RINL facility has reopened to assist with the structural requirement. The primary market's pricing is erratic, and distributors have set premium prices according to supplies. Secondary market prices are falling as a result of a dip in the price of China iron ore, even though trade demand is still declining.