Week opened on dour note with market sentiments of long products taking slight dent as demand of finished product refused to pick up. The unilateral escalation in sponge iron, pig iron and pencil ingot prices since 1st Week May was unreasonably propelled by anticipated shortage of sponge iron and power shortage. Cost escalation had borne pressure on the retail levels getting dragged by it. However price hike always defied demand supply logic.

Mills unable to take the cost hit amidst slow demand have been coerced to correct offers by INR 500-800 per tonne for TMT. Pencil ingot price levels have also corrected by upto INR 400 per tonne although it was not even with rally at some locations. However the mood was largely pessimistic with inkling for further depreciation in the coming days.

Mills have been undercutting their margins with price reduction with input material price levels resistant to correction. However with arrival of monsoon construction activity takes hit from July upto September and mills would rather cut production instead of cutting margins and bloating inventory.