RINL Receives Government Boost as Supply Shortages Challenge Structure Market

Key Market Insights

• Primary Market: Key manufacturers are expected to announce new monthly prices shortly. Last month's revision saw major players like SAIL, VSP, and JSPL increasing prices across structural sections.
• Secondary Market: Regional price decreases observed in Mandigobindgarh, Durgapur, and Raipur by Rs 200-300, with other locations holding steady.
• Supply Challenges: RINL has resumed operations but at partial capacity, affecting the availability of round bars and large structural sections.
• Government Support: Infusions of Rs 1,650 crore into RINL aim to stabilize its operations amidst supply and financial pressures.

Structure Prices

• Secondary Market: Mandigobindgarh down by Rs 300, Durgapur down by Rs 200, Raipur down by Rs 200 while Hyderabad and Chennai are stable.
• Primary market: New Monthly price revision expected to come in the next 2-3 days. Last month revision included SAIL increasing prices by Rs 2000/mt, VSP increasing by Rs 1000-1500/mt and JSPL increasing UB/UC sections by Rs 1000-1500/mt and lower sections by Rs 2500/mt.

Structure Supply and Demand

• Primary: RINL plant is already back in operation, but not at full capacity, and sections of the RINL manufacture have already been placed on the market to help with the supply situation. It is also the only manufacturer of round bars that are now unavailable but are scheduled to roll in 2-3 weeks. In many places, large structural sections are rare, even when they are absolutely necessary.

• The supply is being significantly impacted by the present material scarcity. The reactivation of the RINL facility will assist because SAIL is unable to meet the enormous demand for structural steel. As a result, a significant problem in the primary segment is supply.

• Secondary: Secondary mills are not worried about shortages of the final product because they have enough inventory for normal sizes. However, because of the challenges in finding billet, small mills are facing a shortage of raw materials and a lack of overstocks. Prices are falling as a result of the current weak demand in the commerce sector and the decrease in demand during the Diwali season but seems that next week market will go up as demand will increase.

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

• Ex-Raipur: Rs 46,400/ton

• Ex-Hyderabad: Rs. 48,500/ton

• Ex-Raigarh: Rs 46,400/ton

• Ex-Chennai: Rs. 49,400/ton

• Ex-Mandi Gobindgarh: Rs. 47,900/ton

• Ex-Durgapur: Rs. 45,400/ton

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

• Ex-Durgapur: Rs. 54,500/ton

• Ex-Chennai: Rs. 58,000/ton

• Ex-Hyderabad: Rs. 56,500/ton

• Ex-Ahmedabad: Rs. 57,000/ton

• Ex-Ghaziabad: Rs. 54,500/ton

Structure News

• The government has infused Rs 1,650 crore into state-owned RINL to help it stay operational amid financial and operational challenges. This includes Rs 500 crore in equity on September 19, 2024, and a working capital loan of Rs 1,140 crore on September 27, 2024. Additionally, SBICAPS is preparing a sustainability report on RINL.

Expert Opinion

• New monthly revision price expected to come in 2-3 days, and prices may go up due to external circumstances. All the major manufacturers have increased their prices last month. SAIL prices have increased significantly as a result of a shortage of plant materials.
• RINL round bars are hard to find and highly sought for. The cost of the JSPL segment also gone up much more last month because of the inaccessibility of some essential structural elements. To assist in meeting the structural requirement, the RINL facility has reopened.
• Slow secondary market activity lowers secondary market prices by decreasing trader market demand.