maverick
08-09-2009, 07:31 AM
Tata Steel: Firmness In Long Steel Price Shows Underlying Firm Demand
The firmness that we are witnessing in Secondary prices across India over last few days may have a fundamental reason.
The govt has changed the mechanism of charging the royality on iron ore produced from leased mines from fixed Rs 27/t to 10% of iron-ore prices wef 13th aug09. At current iron-ore prices ex-Barbil @ Rs 3150/t, this works out to Rs 315/t. After considering yield, the net impact of this on producing sponge iron will be in the region of Rs 600-700/t.
Further, the unauthorized mines in Barbil region have been ordered to shutdown leading to a shortage and near panic situation amongst people connected with that business/trade.
This is a big change...and well may be the trigger for any recovery in rebar prices.Sponge iron prices have already reacted witnessing a jump of Rs 1000/t over last one week in Durgapur belt triggering a similar rise in ingot and rebar prices. The cascading effect can be felt elsewhere too.
The firmness that we are witnessing in Secondary prices across India over last few days may have a fundamental reason.
The govt has changed the mechanism of charging the royality on iron ore produced from leased mines from fixed Rs 27/t to 10% of iron-ore prices wef 13th aug09. At current iron-ore prices ex-Barbil @ Rs 3150/t, this works out to Rs 315/t. After considering yield, the net impact of this on producing sponge iron will be in the region of Rs 600-700/t.
Further, the unauthorized mines in Barbil region have been ordered to shutdown leading to a shortage and near panic situation amongst people connected with that business/trade.
This is a big change...and well may be the trigger for any recovery in rebar prices.Sponge iron prices have already reacted witnessing a jump of Rs 1000/t over last one week in Durgapur belt triggering a similar rise in ingot and rebar prices. The cascading effect can be felt elsewhere too.