Scrap shortage pushes up price of TMT bars to 53,000/tonne

Ludhiana: In a serious setback for builders and the general public, the price of TMT bars made by local furnace and steel mills in Mandi Gobindgarh and Ludhiana has shot up by Rs 4,000 to Rs 5,000 per tonne in a little over a fortnight. The price of TMT bar (steel bars used in construction) has increased from Rs 48,000 per tonne in July to Rs 52,000 to Rs 53,000 in the last 15 days.The rate hike is being attributed to short supply of scrap from other parts of the country caused by suppliers fearing penalties imposed in the wake of strict inspections. Ban on export of scrap by the UAE is also being seen as a reason for the present situation.Maninder Pal Guliani, a prominent TMT bar and steel trader from the city said, “The rate of secondary TMT bars has increased by Rs 5,000 per metric tonne in just the last 15 days. In June and July, TMT bars cost Rs 48,000 per tonne. Now, they cost Rs 53,000 per tonne. The price hike comes in the wake of early monsoon, which delayed construction work for the last two months.”Hike in prices of TMT bars, which are the most essential component of construction, has led to an increase of at least Rs 50,000 in cost of construction of small houses too. At least 10 tonnes of TMT bars are used in such construction.According to steel traders, the main reason for hike in prices of TMT bars is the short supply of scrap, which is the main raw material for the furnace industry. There are several reasons for shortage of scrap in wholesale markets of Ludhiana and surrounding areas. “We have learnt from TMT bar manufacturers that they are currently facing a crisis of scrap, which is almost 30% in short supply because sellers from other states are not willing to deal with the industry of Mandi Gobindgarh and Ludhiana because of ongoing inspections by the SGST department, under which huge penalties are being imposed on scrap trucks. Although the drive against bogus billing and tax evaders is a welcome step, why should the common man bear the burnt? Moreover, with UAE banning export of scrap sometime back, the problem of short supply of scrap is on the rise,” said Guliani.Shahanshah Siddiqui, a civil contractor and architect said, “Due to rise in prices of TMT bars, panic has spread among people who had just okayed plans for construction of their buildings. Besides people who had finalised plans for construction of their homes, those getting commercial buildings made are also feeling the pinch of increased rates. Several of my clients who were yet to start construction work have put their plans on hold for some time.”The engineering industry is also worried due to shortage of scrap. The industry is a major consumer of the steel “ingot,” which is used across different sectors like bicycle parts, sewing machine parts and hand tools etc. Narinder Bhamra, president of Fastener Manufacturers Association of India said, “Shortage of scrap and rise in the prices of TMT bars is not a good indication. It is only a matter of time before mills increase prices of Ingot as this too is made of scrap. However, any rate hike at this moment will jeopardise the entire industrial production cycle because already, we are facing several other major issues which have increased our cost of production.”