TMT Market In India Remains Supported: How Long Will It Sustain?

With prices fluctuating across different regions, the Indian TMT (Thermo-Mechanically Treated) market experienced significant volatility in the range of Rs. 200-1,500/ton at the beginning of June 2023. Southern markets like Chennai, Bangalore, and Hyderabad witnessed a substantial weekly decline of Rs. 1,000-1,500/ton. However, the market has shown signs of support in recent days, leading to a price increase of around Rs. 200-600/ton. Let’s explore the reasons behind these market movements and market outlook based on the current trends.

Market Dynamics & Price Revision

The primary mills’ long-awaited price revision played a crucial role in shaping the recent market conditions. As primary mills reduced TMT offers by approximately Rs. 2,500-3,000/ton for June 2023, buying activities resumed to some extent, prompting secondary TMT mills to raise their prices. Market analysts attribute the price increase to material shortages in certain regions, which have further fueled TMT demand.

Current TMT Offers

• Mid-Sized Mill’s Current Offers As Follows:
  • Raipur: Rs. 48,200/ton
  • Delhi: Rs. 52,200/ton
  • Ahmedabad: Rs. 51,400/ton
  • Hyderabad: 50,500/ton

Production Adjustments & Order-to-Order Levels

To align their production levels with domestic demand and supply, secondary mills have curtailed their output due to the persistent downfall experienced in May 2023. Operating at lower conversion rates and fixed conversion opening rates, secondary TMT mills now rely on order-to-order levels to determine their working rates. It is unlikely that mills will return to full-fledged production in the near future.

Market Outlook

While the current upward trend in TMT prices is expected to continue for a few more days, some experts suggest that it may be unsustainable in the long run. The reduced primary TMT rates are likely to exert downward pressure on secondary mills’ offers to maintain the mandatory price difference. Consequently, secondary TMT prices are anticipated to stabilize and regain firmness by the end of this week.

OFB’s Insight

The primary mills’ price revision provided some relief to market participants, resulting in increased buying activity. However, the sustainability of the current upward trend remains uncertain, as secondary mills may soften their offers to maintain the price gap with primary TMT. The market is expected to stabilize in the near future, and secondary TMT prices are projected to regain firmness. Monitoring market dynamics and supply-demand imbalances will be crucial for stakeholders to make informed decisions in the evolving TMT market.

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