The downward spiral in the local Indian rebar market has gained pace with producers dropping prices to manage inventories and with low-to-moderate restocking by trade channels reported in a few regional markets, but generally the latter is considered to be insufficient to reverse the prolonged bearish market conditions and sentiments, SteelOrbis learned from trade and industry circles on Tuesday, May 9.
The sources said that the fundamentals of demand are too weak and that the outlook in the key sectors of construction, real estate development and rural infrastructure is too gloomy for just restocking by traders to be able to revive market conditions. Meanwhile, a trader stated that demand is weak and rebar prices are likely to decrease further.
Rebar trade prices have slumped INR 1,900/mt ($23/mt) to INR 52,400/mt ($641/mt) ex-Mumbai and are down INR 500/mt ($6/mt) to INR 52,500/mt ($642/mt) ex-Chennai in the south.
Trade rebar prices have fallen by INR 1,600/mt ($20/mt) to INR 47,500/mt ($581/mt) ex-Raipur in the central region and are down INR 1,200/mt ($15/mt) to INR 48,200/mt ($589/mt) ex-Durgapur in the east.
“Lower levels are attracting some modest restocking, but are insufficient to offer support to sagging prices at a time when induction furnace operators are dropping prices and dealers too are forced to pass on benefits to customers. There is no scope for improving margins for any market participant,” a Kolkata-based distributor said.
According to sources at Shyam Steel, eastern India’s largest rebar producer, the risks of mills cutting back production is increasing in the face of rising inventories and falling demand and prices.
With the lean monsoon season approaching in another month, several secondary mills will either cutback production or go in for maintenance shutdowns and hope to check the oversupply in the market.
$1 = INR 81.80