Softening raw material costs drag down steel prices across South India

• Central region supply influx exerted pressure, driving price declines in South India
  
  
• MS Billet prices declined by INR 800-1,000/t w-o-w
  
  

Sponge Iron

Sponge iron prices in Bellary witnessed a correction of around INR 1,100/t week-on-week, settling at approximately INR 27,700/t as of 17th April 2026. The primary reason behind this decline is the softening of raw material costs, particularly non-coking coal, along with reduced buying interest from steel smelters at elevated price levels.

Additionally, some sponge iron manufacturers from the central region concluded deals in the southern markets at comparatively competitive rates. This increased supply pressure in the region further led to a downward revision in offers by Bellary-based sponge iron producers.

On the raw material front, iron ore pellet (Fe-63%) prices remained stable on a week-on-week basis, hovering around INR 11,300/t. Meanwhile, RB2 coal prices were assessed at approximately INR 10,900/t ex-Gangavaram port, witnessing a marginal decline of INR 200-250/t over the week.

In contrast, the melting scrap segment showed a firm trend, with prices rising by around INR 500/t to INR 36,000/t for HMS 80:20 grade, mainly due to supply constraints in the domestic market. However, imported HMS 80:20 scrap prices for Australian origin declined by $7/t to $380/t CNF Chennai, indicating mixed sentiment in the scrap market.

 

Billet :

Mild steel billet prices witnessed a decline of around INR 1,000/t across most southern India markets, primarily tracking the correction in sponge iron prices. The downward trend was further supported by subdued demand from re-rollers, who remained cautious in procurement at prevailing price levels.

The current conversion spread from sponge iron to billet in the Hyderabad market is assessed at approximately INR 15,500/t, remaining largely stable compared to previous weeks. This indicates that despite fluctuations in raw material prices, overall conversion economics have not seen significant changes.

Additionally, billet demand in the Chennai cluster is expected to slow down in the near term due to a maintenance shutdown undertaken by a major re-roller. This temporary halt in operations is likely to impact buying activity, thereby exerting further pressure on billet demand in the region.

Rebar :

Induction route rebar prices witnessed a correction of around INR 800-1,000/t across major southern India markets. The decline was primarily driven by weak demand from the infrastructure segment, coupled with unexpected market dynamics that limited bulk trades, amidst supply of rebar from central regions which exerted downward pressure on prices.

In contrast, blast furnace route rebar prices remained firm at approximately INR 60,500/t ex-Hyderabad, holding steady on a week-on-week basis. This stability reflects relatively better demand support and controlled supply dynamics in this segment.

The price gap between induction route and blast furnace route rebar is currently hovering in the range of INR 9,500-10,000/t, indicating a significant spread between the two production routes.

Leading steel manufacturers continue to offer induction route rebars in the local market at prevailing price levels, although selective discounts are being extended in offers to attract buying interest of customers :

Outlook :

The price outlook in the coming weeks is expected to remain stable to slightly positive, supported by the absence of aggressive selling pressure from steel manufacturers. Most producers have already secured adequate bookings in the previous weeks, reducing the immediate need to offload material at lower prices.

Additionally, with inventory levels relatively balanced and no significant distress selling in the market, prices are likely to hold firm. Any marginal improvement in demand could further support a slight upward bias; however, overall sentiment currently indicates a steady market trend in the near term.