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How are TMT steel prices determined?

tmt-steel-prices

Steel is one of the most important materials that go into the construction of any building or structure. No doubt, the cost of steel to be procured from the steel manufacture constitutes a major component of the construction budget. A change in the prevailing rates of TMT steel bars can increase or decrease your construction budget by a considerable margin. 

Therefore, it becomes important to understand what goes into deciding the price of TMT steel, and how TMT steel prices in hyderabad are determined. In this article, we cover all the important aspects related to the pricing of TMT steel bars and the factors that influence the price. So, without any delay, let’s get straight into it! 

Factors Influencing TMT Steel Prices

  • Supply & Demand

The prevailing supply and demand, like in the case of any commodity, is one of the most critical 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, the higher will be the prices. 

On the other hand, the lower the demand in the market, the higher the supply, the lower will be the prices. Therefore, the supply and demand of steel is a deciding factor when it comes to determining the steel factory prices of TMT steel bars. 

  • Cost of Raw Materials 

There are a number of direct and indirect raw materials that go into the manufacturing of TMT steel bars by the steel company. Iron ore and scrap metal are two of the most important raw materials for the manufacturing of TMT steel, and a fluctuation in the cost price of these materials has a direct and tangible impact on the output cost, i.e. the cost of the TMT steel bars. 

The prices of raw materials can fluctuate due to a number of reasons, supply and demand, once again, being one of them, while the availability of raw materials and market controls can be others. Apart from materials costs, the costs related to steel factory operations and labor also have a direct impact on determining the prices of TMT steel. If, for example, the energy (electricity) prices go up, the cost of running the steel factory will be more, and hence it will lead to a rise in the market price of the TMT bars.  

  • Transportation Costs

The mode of transportation used to move the steel bars from the source (steel factory) to the destination (construction site), and the cost associated with it – these are also important factors that cannot be ignored when it comes to determining the price of TMT steel bars. 

Certain modes of transport are cheaper than the others, while the tradeoffs are in the form of transit time and safety. For example, steel bars can be transported through road, water, or rails, depending on the availability of transport, locations of source and destination, and the charges involved. 

  • Industry Trends

When it comes to determining the prices of TMT steel, it has a lot to do with the prevailing trends across the industries and markets. The changing dynamics in one of the key industries can actually impact the available price at which you will be able to procure steel for your construction. 

Take this, for example – if the automobile industry, which is a major consumer of steel, is thriving and doing good, then most of the steel production will be diverted to that industry, reducing the supply of steel for construction. As a result, the price of TMT steel bars is bound to go up. 

  • Time of Year

The time of the year at which you want to buy TMT steel bars is also an important factor to determine the price at which you will get them. The prices of many commodities vary with time throughout the year, and steel is no different. 

The weather conditions, seasons, holidays, etc determine the production as well as the demand for steel. For example, the production of steel might go down during the months of severe winters. As a result, the price of the steel bars will also get impacted and will go up. 

The Takeaway

We are sure that after reading this article you are fully aware of how the TMT steel prices are determined and what factors impact the prices. So the next time you set out to buy TMT steel bars from a steel company, keep these things in mind. Equipped with this knowledge, we are sure you will make the right decision!