Secondary TMT Notices Stability But Struggles To Maintain A Price Gap

Secondary TMT remained supported last week, indicating a demand increase. Market experts suspect that the price increase is a result of raw material scarcity or other underlying issues. Stocks are limited at plants, with numerous orders from dealers, leading to a focus on maintaining stock for various diameters. Let’s explore more about the same:

Market Scenario

The mid-sized mill’s Rebar market experienced a stagnant phase following recent growth in demand. Buyers have made ample bookings for several consecutive days. Although mills have maintained the same rates in a few markets, price stability is anticipated this week, with a possibility of a decrease to widen the gap with Primary TMT, OfBusiness assessed.

Price

The operating prices for Secondary TMT for some regions:

• Raipur: Rs. 48,000/ton
• Delhi: Rs. 52,200/ton
• Ahmedabad: Rs. 51,700/ton
• Hyderabad: Rs. 50,700/ton

Challenges

Secondary TMT faces difficulties due to the price gap with the primary segment. The aggressive market in the secondary sector has put margins under pressure, leading to lower conversions to secure orders. In an attempt to counter this, plants are emphasizing retail orders to achieve better margins. However, the mix of project and retail orders has created supply issues for secondary plants.

Market Outlook

Iron Ore experienced a decline for the first time in nine sessions, with concerns raised by market experts about property weaknesses affecting China’s economy in the long term. The steel-making sector saw a drop of almost 5% as persistent problems in Chinese real estate were highlighted. Meanwhile, the secondary TMT demand has increased and is expected to remain on an uptrend. However, the rates are unlikely to significantly decrease due to the arrival of the monsoon season and the marginal price difference between Secondary TMT and Primary TMT in some regions. An unsustainable uptrend could create supply challenges for the primary market, as consumers prefer primary materials due to the rate difference.

OFB’s Opinion

Currently, the secondary TMT market is stable, with growing demand and challenges in maintaining margins and supply. The effects of Iron Ore’s decline and the monsoon season pose additional considerations for the market. While demand is expected to remain on an uptrend, substantial rate decreases are unlikely, potentially impacting primary materials supply. Industry players will need to navigate these dynamics to ensure a balanced and sustainable market.

Read more: Indian Pellet Industry Observes Improved Trading Activities

For real time commodity prices, latest news, and insights, please download the all NEW and all FREE OfBusiness APP