Rough weather prevailed today in pencil ingot and TMT market virtually clouding all streaks of revival. The intense downtrend has thickened in August reeling under monsoon effect despite lack of rainfall. The gory picture is evident in the below tables but in all pencil ingot and TMT prices have lost nearly INR 2500-3000 per tonne over the last two months.

Steeply plummeting prices have altered the cost and margin dynamics. Apart from squeezing the rolling margins it has exerted downward pressure of scrap levels. Since the sponge iron levels are resistant owing to scanty availability after the restriction on iron ore mining in Odisha. Furnace owners have been quick to switch over from sponge iron to scrap as feeder. The shattering effect has been narrowing down of conversion margin from scrap to ingot to INR 4500-5000 per tonne from INR 7000 per tonne and likewise the margin from ingot to TMT bar from INR 5000 to INR 3000-3500 per tonne.

International scrap levels have improved off late owing to Turkish buying picking up after Ramadan however the Indian importers are unwilling to accept new levels of USD 380-390 per tonne. On the contrary buyers are ready to pay only USD 360-365 per tonne and ready for re-negotiation.

Slow offtake of TMT has culminated in price decline and rise in inventory levels with the mills and stockists. Most of the primary mills have left the price levels untouched however the secondary producers have acquiesced long time back to the new realities.

Import of cheap TMT bars from China has increased steeply off late with price levels being USD 490-495 per tonne which is lower than billet prices from Black Sea port. This unbelievable price has been attained by importer and Chinese mills by circumventing the classification of non-alloy steel thereby not only getting benefit of rebate in export duty in China but also paying import duty of only 5% as these materials don’t need certification as per IS 1786.