Structure Market Update: Secondary Market Stable; Supply Shortages Drive Primary Pricing Trends

Key Highlights

• Primary Price Changes: SAIL raised prices by Rs 750/mt, and RINL by Rs 1000/mt, while JSPL maintained rates in November.
• Supply Crunch: IISCO's maintenance has disrupted supply for heavy structures like NPB and WPB, while RINL's round bars remain unavailable.
• Secondary Market Trends: Adequate inventory sustains supply, but minimal demand and declining iron ore prices in China weigh on performance.
• Expected Recovery: Post-monsoon demand recovery is expected, alongside better margins for steel firms due to falling coking coal costs.
• Uncertainty in Pricing: Distributors in the primary segment set premiums based on limited supply, while secondary prices are under pressure.

Structure Prices

• Secondary Market: Stable in all regions.

• Primary market: As per new monthly price revision, SAIL increased prices by Rs 750/mt, RINL increased price by 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. 47,800/mt

• Ex-Durgapur: Rs. 45,100/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 is under maintenance for 45 days. It manufactures heavy structures like NPB, WPB, and others that are in high demand throughout India and are being 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 have no worries 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 also seeing an inquiry closure, and the secondary market is getting inquiries. The demand for secondary market trading is still minimal.

Structure News

• Indian Steel companies are poised for stronger demand and better margins in Q3FY25, as per a Centrum report. The post-monsoon season is expected to boost demand, with long steel prices rising while flat steel prices remain stable.
• A $25/mt drop in coking coal costs is also anticipated to enhance margins. Despite these positive factors, net debt for steel firms increased by 6-20% QoQ in Q2FY25 due to capex expansions.

Expert Opinion

• SAIL and RINL increased their rates by Rs 750 and Rs 1000 per mt, respectively, this month, while JSPL rolled over the rates. The supply problem is caused by the IISCO facility's 45-day maintenance period and the acute shortage of plant supplies for massive beams/NPB that are sold at high rates. The price of the JSPL segment also saw a notable hike last month as a result of the inaccessibility of important structural elements. Distributors base their premium rates on supply, and the primary market's pricing is unpredictable. As a result, secondary market prices are declining.