Primary Vs Secondary TMT Price Movements During the Third Week of May 2024

This week began with a massive change in the primary and secondary TMT prices, as noted by OfBusiness.

The primary TMT market opened with a surge of Rs 500-1,000/ton in all of its major markets in the south, west, north, and eastern regions.

However, the secondary TMT prices declined in the same proportion across the major markets, with a sharp decline of Rs 500-700/ton reported in central, east, and north India.

Factors Driving Change in the TMT Market

Supply-shortage of primary TMT is boosting prices in the market. Take a look at all the factors leading to this supply shortag..

• Closure of RINL Plant: OfBusiness noted that since there is no availability of stock with RINL due to plant closure, there is an imbalance in supply-demand, especially in the south, west, and north regions.

RINL, known as Vizag Steel, has reportedly closed operations for finished steel production as the plant is facing a coal crisis due to ongoing labour agitation for improved wages. As a result, the rolling operations of the plant are closed for a few days, resulting in a supply shortage of TMT.

The plant is known as a major long steel producer and supplies materials across the south market, including a few markets in the west and north regions.

Since the plant has a stock of TMT, the buyers are forced to book material from other major mills, resulting in a surge in primary TMT prices.

• Maintenance Shutdown: Apart from RINL’s closure, SAIL’s plants, located in the eastern region are also going for a maintenance shutdown, which is going to affect TMT’s supply in the market.

Durgapur Steel Plant and IISCO Steel Plant based in West Bengal are the plants scheduled for maintenance works.

These plants are largely selling material across north-east parts. With the scheduled start of maintenance work this week, the supply of TMT will be affected.

The cumulated supply of long steels including TMT by these primary mills (RINL and SAIL’s DSP, and IISCO plants) is reported to be around 3 to 4 lakh tons (0.3 – 0.4 million tons) on a monthly basis.

Secondary TMT Market Faces Pressure

Short-term pressure mounts on the secondary TMT market, leading to a decline in prices in major locations. However, despite a decline, there is hope among participants that the market will rebound soon.

They believe since the elections are going to end in the coming few weeks, demand and transactions in the country will improve as several major projects are in the pipeline.

A temporary disturbance in the payment cycle and a constant surge in prices earlier are resulting in the current cautious trends. A resurgence in demand is likely to take place by month-end, as per sources.

Despite softening in prices in the last 3-5 days, the lifting of TMT of previous orders remained active,  indicating that the current fall is short term.

Future Prospects for the TMT Market

Since the primary TMT market is currently witnessing a supply shortage, the scope for a further strengthening of prices in the coming days is high.

Also, as the secondary market is believed to be in a short term decline, the overall market outlook looks promising and is expected to report improvement in demand in the upcoming days as the elections come to a close.

Get latest steel news, market updates, and price trends on OfBusiness.