Weekly Update: Secondary Steel Market Rebounds, Primary Continues to Remain Stable (May Week 3)

During the third week of May (13 to 18 May), the secondary steel market in India lagged support in the initial days of the week. However, later, with an improvement in demand, the market noted a surge in prices week-on-week..

Meanwhile, during the same time, prices of primary steel mills remained supported as it was firm after a hike earlier this month.

According to data maintained by OfBusiness, the market has started to find support during the weekend due to weekly changes. The prices show a surge of up to Rs 500/ton by the secondary steel mills.

Overview of the Secondary Steel Market

• Sponge iron, MS Billet, and TMT: The prices of sponge iron and billets moved up by Rs 200-500/ton, while TMT prices more or stable with a slight change of Rs 100-300/ton.

According to industry participants, a slight cautiousness in the market prevailed in the beginning of the week. However, later with improved sentiments globally, the Indian buyers also started taking positions. As a result, demand finds support in the market, and ultimately, prices found support.

In terms of supply, it is maintained as a slightly low productivity was noted in finished steel products. Overall, with a balanced supply, there was support in the market as a few finished steel (TMT) mills reported a shortage of material for a particular sizes.

• Raw Materials: The prices of iron ore and coal remained strong and there were hardly any changes. However, a slight rise of Rs 100-200/ton was recorded in pellets in a few major locations, week-on-week.

Trade sources mentioned that, in general, there are improvements in raw materials sourcing by steel mills before the monsoon starts to secure stock, as transportation concerns arise when the rains begin. Thus, there are assumptions that demand for raw materials, including iron ore and pellets, and prices as well, will remain supported in the coming weeks.

• Ferro Alloys: The prices of silico manganese have fallen by Rs 5,000-6,000/ton week-on-week. Since the steel demand and prices softened in the initial days, the traders aggressively started offering material in the spot market and left the market unbalanced. This created negative trends and a decline in prices after a sharp surge of Rs 30,000/ton in prices from the low levels in March end-April 2024.

The participants in the industry believe that the prices of silico manganese will remain strong as input costs are higher following a significant surge in manganese ore prices globally due to supply shortages. Thus, a further sharp decline in prices is less likely and hope is there for the recovery in the market as stock is also limited at the manufacturers’ end.

Primary Steel Market Stays Strong

There was no change in the primary mills’ structure, TMT, and flat steel market and the prices stayed high.

Demand for flats and structures was reported to be modest, however, slightly low inquiries in TMT were reported by participants. As a result, there are assumptions that if demand remains in the same range (low), mills will slightly lower prices of finished long steel products, especially for TMT, in the coming days.

Market Outlook for the Steel Industry

For the short-term outlook, industry insiders remain optimistic about the Indian steel market, expecting stability or volatile trends in the coming days. Positive global trends, particularly driven by recent stimulus packages in China’s construction industry, are expected to influence the steel market dynamics globally. Reports of Chinese government initiatives to address surplus unsold homes and support distressed developers have bolstered confidence in the steel sector, including that of the Indian and European countries.

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