Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

The Union Minister for Road Transport & Highways and Micro, Small and Medium Enterprises, Nitin Gadkari, stated that he has appealed to the central government to regulate rising steel prices in a live online interaction with Builders Association of India (BAI) on January 9. Business associations from Punjab were also apprised of the move. MSMEs that are a part of these associations have been writing to the government, seeking remedial action on the surging raw material prices, including those for rebars, HR coils, and mild steel, used in the manufacturing of bicycles and other finished products.


Gadkari also added they are probing cartelization in the wake of a hike in finished steel prices by almost 55pc in the last six months. He further added that most primary steel manufacturers hold captive iron ore mines, making them immune to the rise in ore prices. While other input costs like labor, power charges have remained unchanged.


The bullishness in steel prices, along with cement, is also delaying the implementation of infrastructure projects. Reaching a $5 trillion economy could be challenging if raw material cost keeps increasing, stated Gadkari.


Price hike by secondary steel manufacturers has been comparatively lower. Thus, the scrap to rebar spread tightened as the raw material rose at a higher rate than finished steel. Since August 10, 2020, ferrous scrap and sponge iron prices in Mandi Gobindgarh rose by 35pc to Rs29,700/mt del Mandi Gobindgarh and Rs28,700/mt del Mandi Gobindgarh, respectively, till January 8. While rebar prices increased by 21.9pc to Rs45,500/mt ex-works in the period, according to Davis Index analysis. Most mills cited margin squeeze as the rationale for the price raise amid bullish raw material prices.


Gadkari also hinted at the formation of a steel regulator, an announcement which BAI and Ludhiana business association have hailed. These business bodies have even called out for a mechanism for early settlement of bills against government contracts, and streamlining GST implementation.



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