Long products spot prices up

May 7, 2009: Steel makers such as Tata Steel and Rashtriya Ispat Nigam (RINL) have increased prices of long products sold in the spot market by up to Rs 1,000 per ton this month.

This is a 3 percent increase on the back of a spurt in the metal's demand from the construction sector, its primary user. The development marks the end of a year-long downturn, which saw long product prices falling by a third to Rs 30,000-32,000 per ton early this year, from the July 2008 peak of Rs 48,000-50,000 per ton. Steel prices stabilised early this year with a marginal pickup in construction activity.

Long steel products such as bars, rebars and structurals constitute about 60 percent of the country's total steel production.

While Tata Steel has increased prices of long products by Rs 300-500 per ton, RINL has increased long product prices by up to Rs 1,000 per ton. A Tata Steel spokesperson confirmed the price hike but said it was more of a "market correction." Almost 20 percent of Tata Steel's total production of over 6 million tons is sold in the spot market.

RINL commercial director C.G. Patil said the temporary price revision was in sync with market conditions and would return to normal once the monsoons set in. "Due to frequent power cuts, the production of ingots by secondary producers has declined. This will get to normal with the onset of monsoon," he said, reasoning the price hike. Post-price revision, the rebars manufactured by RINL are selling in the range of Rs 31,200 and Rs 34,750 a ton.

However, India's largest steel producer - SAIL and Jindal Steel & Power - are yet to make changes in spot market prices.

Source: The Economic Times