Local Indian rebar producers, small and large, have continued to lower prices of their inventories even as most of them have almost stopped billet conversion to rebar in view of the halt in all distribution channels and construction activities across the country, SteelOrbis has learned on Wednesday, April 1.
Integrated steel mills have almost stopped billet conversion to rebar and are operating at minimal capacity utilization, while secondary steel mills have stopped production and lowered the prices of existing inventories, but have failed to ensure any off-take.
Market sources said that secondary small and medium-scale steel mills have reduced prices by INR 200/mt ($3/mt) week on week to INR 31,800/mt ($421/mt) ex-warehouse. Integrated steel mills have lowered prices by INR 500/mt ($7/mt) to INR 39,400/mt ($521/mt) ex-warehouse.
“We typically cater to large construction companies, but even lowering our price for existing inventories, construction companies having stopped all ongoing projects during the national lockdown are not placing any fresh bookings,” a manager at Rashtirya Ispat Nigam Limited (RINL), a primarily long steel producer, said.
“The outlook for the construction industry is extremely negative and this will impact the outlook for long steel products for the next several quarters,” he added.
According to a recent report of India Ratings and Research (Ind-Ra), 30-35 percent of the annual revenues of domestic construction companies would normally be earned in the last quarter of the calendar year (ends March 31) but because of the national lockdown since March 25 and the stoppage of ongoing projects this could decline to 10 percent for the last quarter of the fiscal year 2019-20, and the impact could continue well into April.
Most integrated steel mills will continue to lower production of long products and secondary steel mills will reduce commercial procurement of billets, leaving integrated steel mills with the only option to push higher billet volumes overseas even at lower plant capacity utilization rates.
Housing construction in new real estate projects, the main demand center for small and medium-scale rebar producers, has seen a 42 percent drop since January and this is expected to continue to fall during the first quarter of the current fiscal year, putting further stress on prices of long projects, according to a steel sector analyst at a Mumbai-based financial advisory firm.
$1 = INR 75.60