Structure Update: Stable Secondary Market, Rising Imports Pressure Primary Producers

Key Takeaways

• Primary Market Prices: During November SAIL increased prices by Rs 750/mt, RINL by Rs 1,000/mt, while JSPL maintained current rates.
• Secondary Market Prices: Prices are stable across all regions with slight regional variations.
• Supply Issues: IISCO's ongoing maintenance and limited availability of round bars and other heavy structures are causing supply constraints in the primary market.
• Steel Imports: Rising duty-free imports from FTA nations challenge domestic producers, limiting the effectiveness of proposed tariffs.
• Expert Outlook: Primary prices remain uncertain, while secondary prices are stable but may rise as demand strengthens.

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 prices 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. 47,700/mt
• Ex-Durgapur: Rs. 44,900/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 factory, which has been undergoing maintenance for the last 15 days and would take another month to start production, is holding up heavy structures like NPB, WPB, and others that are in high demand throughout India and sold at premium prices. It has caused a serious issue with the availability of primary materials. The only producer of round bars that is now out-of-stock is RINL. However, it should be delivered next month. When an order is placed, it takes two months for the market to send the material to the JSPL region, which is equally underserved. Consequently, supply is a major issue in the primary segment.
• Secondary: Secondary mills are not worried about material shortages because they have enough inventory for conventional sizes. Mills have enough billets to manufacture new stock, but there is a shortage of scrap. The secondary market's potential is declining in tandem with the drop in the price of iron ore in China and the sluggish demand in commerce. There is currently a surge in demand and a close-in of inquiries at the mills.

Structure News

• Steel Secretary Sandeep Poundrik stated that 62% of steel imports come from FTA countries at zero duty, making any customs duty hike ineffective in curbing these shipments. This comes amid rising concerns from domestic steel producers over cheap imports, particularly from FTA nations, which are creating a supply glut and affecting competitiveness. The industry has called for higher tariffs, but the prevalence of duty-free imports under FTAs limits the effectiveness of such measures.

Expert Opinion

• SAIL and RINL increased their rates by Rs 750 and Rs 1000/mt, respectively, this month, while JSPL rolled over the rates. The main causes of the supply problem are the 45-day maintenance period at the IISCO facility and the acute shortage of plant supplies for massive beams and NPB, which are sold at astronomical rates. To help with the structural requirement, the RINL facility has reopened. The primary market's pricing is uncertain, and distributors base their premium rates on supply.
• Secondary market prices are stable now and it seems price will increase.