Weekly Update Sector: Steel Date: 20-25 June 2011

Weekly Highlights
Ingot

Market last week

Ingot Price Chart

previous (20.06.11) current (25.06.11)

35,000 34,500 34,000 33,500 33,000 32,500 32,000 31,500 31,000 30,500 30,000

Power tariff hike in Rourkela pushed up Ingot prices marginally Demand continued to be weak and production level remained low Negative settlement of June contract on NCDEX suppressed the market sentiments

Price (Rs/MT)

Ingot Prices as on 25 June Price(`/MT) Previous Week Place ` Alang 32,750 33,000 Chennai 32,000 32,000 Durgapur 31,300 31,700 Ghaziabad 34,200 34,100 Hyderabad 30,500 31,100 Jamshedpur 31,500 31,800 Mandi Gobindgarh 34,000 34,200 Mumbai 31,650 32,200 Muzaffarnagar 33,900 34,000 Indore 32,200 33,000 Raipur 31,800 31,650 Rigarh 31,600 31,300 Rourkela 31,400 31,400 NCDEX - JULY 30,390 30,130 Price inclusive of Excise Duty, taxes extra

How it was?
Change(`/MT ) -250 0 -400 100 -600 -300 -200 -550 -100 -800 150 300 0 260

Ingot prices at Raipur and Raigarh went up because of short supply of sponge iron in both the markets. Sponge iron prices in Orissa went up because the trading licenses which were cancelled in the beginning of the month started to take its toll. While, Ingot prices in the rest of the country saw correction of nearly 2% due to a slowdown in demand.

How it looks? The strength in the ingot prices in Raipur and Raigarh may be short lived and will see a correction as the supply position of sponge iron improves. The work on re-instating the licenses has already begun as far as the Orissa iron ore trading licenses are concerned, and the supply of sponge iron will improve in the days to come which strengthens the chances of reduction in ingot prices. Also, the cost of diesel has gone up by nearly 8% on Friday which is expected to result in further margin tightening for the ingot manufacturers as the weak market conditions will not allow them to pass on the price hikes completely. 1 www.steelmint.com

Scrap

Market last week

Scrap Price Chart

previous (20.06.11) current (25.06.11)

Price (Rs/MT)

30,000 25,000 20,000 15,000

Advent of monsoons pulled down scrap prices at few mandis Cheap Imported scrap affected the domestic scrap price in Mumbai. Local scarp was offered at Rs 24,000/MT Imported Scrap prices went down by $10; now offered at $465470/MT in the international Market (Turkey)

HMS Scrap Prices as on 25 June Price(`/MT) Previous Week Place ` Alang 22,900 23,150 Chennai 24,500 24,500 Goa 23,000 23,500 24,000 24,000 Hyderabad 23,000 24,100 Indore 24,500 24,500 Jamshedpur Mandi Gobindgarh 26,500 26,500 Mumbai 24,000 24,000 25,200 25,300 Raipur Excise Duty & taxes extra as applicable

How it was?

Change (in ` ) -250 0 -500 0 -1100 0 0 0 -100

It was a steady week for steel scrap market. Domestic Scrap prices remained unchanged at most of the mandis. Steel manufacturers are now keeping their production low due to monsoon season which has also kept the prices in check. Indore market remained the worst performing market where prices corrected by Rs 1,100/MT.

How it looks? Currently, imported scrap is available at a lower rate which is expected to keep prices of domestic scrap in check. Due to monsoons ahead, Ingot manufacturers may also keep production low and thus may not build their stock for scrap. Further, increase in diesel prices will make transportation dearer too, resulting in low margins for scrap trader (anyone holding stock) and thus limiting chances for a price rise.

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TMT

TMT Price Chart

previous (20.06.11) current (25.06.11)

Market last week

40,000 38,000 36,000 34,000 32,000 30,000

Price (Rs/MT)

Re-bar prices moved down sharply at major mandis. Construction activities slowdown as monsoon arrives earlier Interest rates and fuel cost move up Demand remains weak

TMT (12MM) Prices as on 25 June Price(`/MT) Previous Week Change (in ` ) Place ` Chennai 37,300 37,000 300 Durgapur 36,400 37,000 -600 Hyderabad 34,200 34,700 -500 Indore 37,800 39,300 -1500 Jamshedpur 37,000 37,000 0 Mumbai 36,300 36,400 -100 Nagpur 37,400 37,500 -100 Raipur 34,850 34,850 0 Price inclusive of Excise Duty, taxes as applicable

How it was? A sharp downward correction in Ingot prices and weak demand has forced Re-bar manufacturers to reduce their prices. Re-bar prices at most of the mandis went down by Rs 1001,500/MT. Whereas, Re-bar prices at Chennai move up by Rs 300/MT. The demand for finished goods was still uncertain as buyers held their purchase. Also, they are not willing to pay much.

How it looks? Activity in the market remains low as buyers have held their purchases. Prices will only pick up once demand for finished products improves. Domestic steel prices are unlikely to go up in the coming days due to a possible correction in raw material costs and lower production figures. The outlook for the market is not very encouraging and is expected to remain dismal during monsoons. To an extent, it will depend on how monsoon turns out.

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