Long steel market has been happening place over the past 2 months. The multiplicity of factors ranging from shortage of iron ore after closure of mines in Odisha, shortage of TMT to steep hike in freight by 6.5% recently have played truant in an otherwise decrepit marketplace.

Since May pencil ingot and TMT prices have been on roller owing to shortage. Price levels increased to the tune of INR 2500-3000 per tonne for both. Even though the secondary sector took lead primary mills were also pushed to maintain parity. Subsequently mild correction in secondary levels owing to poor offtake did not impact the major mills since they had low inventory levels although buyers were hesitant in buying.

Off late market is destined firm tenure owing to the following reasons despite approaching monsoon and slow demand.

1) The recently announced railway freight hike, is going to Impact all commodities - steel, cement and others.

Even though most of the primary mills have not come out with cost implication and anticipated price hike hike by INR 500-1000 PMT seems inevitable.

Please Note - freight hike, hits finished steel prices in more than one ways. Firstly, in transportation of raw materials, that of iron-ore, coal etc imperative for steel production and secondly, transportation of finished products to various locations across the country.

2).Also, the unfortunate accident at SAIL - Bhilai (gas leak) has affected its production as 5 Blast Furnace was shut down and it will take some time before supply normalizes.

3) TMT shortage with the primary producers remains unresolved , hence the inventory at the stockyards remain low .

Hence sentiments in the market remain unchanged with mills keeping the price unchanged or even likely to hike at the same time off take remaining low owing to approaching monsoon and slow economic activity.