Steelmaking is an essential industry for any economy in today’s day and age. The steel industry of India contributes around 2% to the country’s annual GDP, creating job prospects for over 25 lakh people both directly and indirectly.
Production of steel is determined by many variables like iron ore, coking coal, limestone, natural gas and power, and many more. Manufactured steel is subjected to multiple numbers of events that can influence the price like any other commodity.
Moreover, steel is one of the most critical materials that go into the construction of any building or structure. Undoubtedly, the cost of steel to be procured from the steel manufacturer constitutes a primary component of the construction budget. A change in the prevailing rates of TMT bar price today can affect your construction budget by a considerable margin.
Whereas Thermo Mechanically Treated Steel or TMT bar is formulated with the TMT process of metallurgy. It has high strength and is quite flexible and remains a vital material for constructing any building or structure.
TMT bars are extremely crucial to the construction industry. However, there are constant discrepancies when it comes to TMT bar prices throughout the year. Many find it difficult to understand without realizing that the price of such materials in demand depends on various aspects.
Therefore, it becomes imperative to understand the factors in determining the price of TMT steel, and how TMT bar prices in India are determined. Like in any other product or commodity, considerable factors play a pivotal role. In this article, the important aspects related to the pricing of TMT steel bars and the factors that influence the price are highlighted:
1) The Supply and Demand of Steel
One of the critical factors that help decide the TMT bar price in the market is the overall demand and supply of the material. TMT bars will be more expensive if the supply is less and the demand is greater. Likewise, with supply being more and demand more petite, the price of TMT steel goes down.
When the manufacturing industry is bullish, steel prices increase because more companies are in demand for steel under a limited supply. While the demand diminishes, the balance of power shifts towards the steel users, and prices drop consequently.
The overall supply and demand, like in the case of any commodity, is one of the most crucial factors that determine the price of TMT steel bars in the market. The logic is simple – the higher the demand in the market, the lower the supply, and the higher will be the prices.
2) Availability and Cost of Raw Materials
A combination of direct and indirect raw materials is used to produce TMT steel bars. Iron ore and scrap metal are the two most substantial raw materials used in manufacturing the best TMT bar in India. Any change in their costs directly influences the production cost and hence, the final TMT bar price manufactured by these companies. In addition, TMT steel prices are also influenced by costs related to steel factory operations and labor.
3) Transportation and Distribution Costs
The mode of transportation employed to move the steel bars from the source (steel factory) to the destination (construction site), and the cost associated with it – are also important factors that cannot be ignored when it comes to determining the TMT bar Price.
Specific modes of transport are cheaper than others, while the tradeoffs are in the shape of transit time and safety. For example, steel bars can be transported through road, water, or rails, counting on the availability of transport, locations of source and destination, and the charges involved.
Furthermore, this is one crucial factor to figure out TMT bar prices in Hyderabad or all over India. The mode of transportation used to transport the steel bars from any factory to the final construction site determines the price per KG of the TMT bar being transferred.