Indian primary rebar producers have cut their prices reacting to demand weakening amid the slowdown in large construction projects during the current monsoon rainy season, leading to the softening of tradable prices, SteelOrbis learned from trade and industry circles.
Large integrated steel mills led by JSW Steel Limited and Jindal Steel and Power Limited have reportedly lowered rebar base prices by a range of INR 1,500-2,000/mt ($20-27/mt) to INR 53,500-54,000/mt ($720-727/mt) ex-works, with tradable prices heard down to INR 55,000/mt ($740/mt) ex-Mumbai, compared to INR 57,000/mt ($767/mt) a week ago.
However, the sources said that secondary rebar producers, which have higher average costs of production, have not enjoyed any leverage to use pricing to push higher volumes into the market.
Secondary mills’ rebar prices have been maintained at INR 51,000-52,000/mt ($688-701/mt) ex-works, with the apprehension among sellers that, with the price differential with primary producers’ rebar narrowing, more volumes from integrated mills could come into the retail sales market, putting prices under additional pressure.
A section of the market felt that prices may have bottomed out for secondary rebar sellers.
“The residential housing sector is recovering. According to the latest Reserve Bank of India (RBI) report, inventory of finished houses is down to 700,000 units, the lowest in 24 months. Housing sales during the first quarter of 2021 improved across cities. While it will take several quarters to clear inventory of finished houses, the recovery will prompt real estate developers to start launching new projects, which can improve raw material bookings in the coming quarters,” a steel sector analyst with a Mumbai-based financial services firm said.
However, rating firm CARE Ratings maintains a more cautious outlook on prices. According to the rating agency, commodity prices are still very elevated and pushing up housing costs at a time when household savings have been eroded by the pandemic.
Costs of steel and cement are still too high and, unless they cool down, costs of projects will continue to escalate, reducing demand and hence a correction in long product prices is essential for demand generation, the firm said.
$1 = INR 74.30
