Long Steel Price Gap between Primary & Secondary Mills Widen Further

According to Mining News Pro - While considering monthly average prices of Durgapur - eastern India, the price gap between large and medium/small scale mills in rebar & wire rod has moved up significantly by INR 2,300/MT and INR 2,800/MT, respectively M-o-M in Feb `20.

Also it increased further by INR 1,500/MT & INR 2,500/MT in Mar’20 (till 14th Mar) in rebar (12 mm) & wire rod (5.5 mm) respectively.

On an average the price gap should be not more than of INR 4,000-4,500/MT between these mills finished steel prices. However currently it is evaluated at INR 5,500-7,500/MT in major locations.

Since Feb`20, the medium/small scale mills have observed limited demand from the local buyers as monthly average rebar prices moved down considerably by 2-4% (upto INR 1,600/MT) in most of the regions. Medium scale mills In India contribute nearly 60-65% share in India`s finish long steel production. In central India, capacity utilisation is close to 65-70% considering maximum number of plants.

Most of the trade participants anticipate that medium/small scale mill finish long steel production level might remain under range-bound in near term which is being evaluated at 63.06% and was recorded at 2.51 MnT out of 3.98 MnT in Jan’20.

On the other side, large scale mills raised finished steel prices by INR 500-1,500/MT in Feb’20 and INR 500-1,000/MT in Mar’20. In addition, rebar inventories with large mills has come down by over 6% M-o-M and was registered at 2,45,000 MT in Feb’20 against 2,60,000 MT in Jan’20.

Its possible that price gap might hold the same range considering MoU between large mills and their trade associates (Distributors/Stockist) and witness nominal changes as per regions. They may offer rebates to escalate buying interest.

Also with rising price gap it seems buyers may turn towards mid scale mills long steel rather than primary mills considering lucrative offers.

Price gap between Large & Medium Scale Mills, Rebar & Wire rod.