Local Indian rebar prices have remained stable during the past week, but the market has sunk further into the uncertainties and negative outlook stemming from reports of a sharp contraction in the construction sector.
Market sources said that rebar prices in the local market have remained at INR 36,200/mt ($487/mt) ex-stockyard for integrated steel mills and INR 30,400/mt ($409/mt) ex-stockyard in the case of secondary mills.
However, nervousness has gripped the market as the government announced a contraction of 23.9 percent in India’s GDP in the April-June period this year, the peak period of the national lockdown, and, what is worse for the rebar market, the construction sector reported its worst contraction of over 50 percent.
Almost all traders that SteelOrbis spoke to said that they had halted fresh bookings as user segments were unlikely to show any bounce back from such a sharp contraction and key consumers in real estate development or infrastructure are unlikely to commit funds to projects or raw material bookings in any significant manner.
They pointed out that, despite the aggravated negative market environment, intermediaries in the market are also nervous over whether integrated and secondary rebar producers will push ahead with a base price increase in September.
Sources said that, while most steel mills have given clear indications that they will go in for hefty hikes in flat product prices, it is yet not clear whether producers could attempt risking higher long product prices given the bearish demand conditions among user segments.
“The worst is not yet over. At least in the long product market. The contraction in user industries is too sharp to witness any immediate recovery. Also, it might be noted that the worst economic contraction in the country in over four decades will also worsen the government’s fiscal position and thereby eliminate an increase in government spending in key infrastructure that could have triggered a demand uptick for construction materials like rebar,” an official at Rashtriya Ispat Nigam Limited said.
$1 = INR 74.40