Will Indian Billet Offers Fall Further ?
Falling ingot/billet production of standalone mills has lowered supply in merchant market, however weak demand of finished steel products remained a concern. Therefore prices remained volatile since more than a week's time amid subdued trade activities.
Meanwhile as the margins (conversion spread) are on bottom line, the industry experts believe that there is less scope for further drop in ingot/billet prices along with expected stability in raw materials like sponge iron, pig iron & scrap.
SteelMint learned that in major locations the secondary manufacturers are facing liquidity crunch over limited sales amid low conversion. Thus they are forced to reduce production to maintain balance between demand-supply.
According to participants in Raigarh, “most of the medium sized furnaces have cut down their operation and are running units for 12 hrs (50%) instead of 24 hrs in a day.”
Similar conditions were reported in Raipur, West Bengal, Odisha, Jharkhand & Maharashtra (Central, East & Western India). These plants include standalone Induction furnaces, rolling mills & hot rolling mills.
Another source in central India reported, “As of now 50% production cuts continued, although few manufacturers are running their mills that have raw material stocks. While others who are out of stock are in a wait & watch mode to buy raw materials”.
Further in eastern India, Odisha based 100-300 TPD sponge manufacturer reported that most of Ingot/billet manufacturers have temporarily halted operations which do not have any stock of raw materials i.e. sponge iron.
Moreover similar comments were received from sponge manufacturers in Jharkhand whose sales were hampered over the closure of furnaces in the region.
As per sources, in Jharkhand about 25-30 steel plants have downed their shutters after state government exorbitantly hiked power tariff by 38% with effect from Apr'19.
Hence the producers don't have other option than to close down operations as their production cost has spiraled, SteelMint learned in conversation with industry participants.
source: SteelMint
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