Indian rebar market showed a mixed trend during the past week with most integrated steel mills maintaining prices, while secondary steel mills lowered prices and gave discounts, but still failing to push significant volumes among buyers in real estate and rural housing projects, SteelOrbis learned on Tuesday.
Most integrated steel mills were carrying high rebar inventories even after sharply reducing billet conversion and were maintaining prices as demand pick up from government funded large infrastructure projects were expected sooner than demand in construction and private investments.
For example, large government funded metro rail construction projects have been resumed across several Indian cities and construction companies have started placing rebar orders with large suppliers and this was expected to provide modest incremental demand for integrated steel mills.
Secondary steel mills were continuing to slash prices and topping it up with heavy discounts but demand from key consumers in real estate and housing was slack. It was pointed out that secondary steel mills normally accepted bookings on cash on delivery terms. Real estate developers are restarting projects in urban areas, but are facing huge liquidity crunch with banks reluctant to increase working capital requirements and were insisting for at least 30-60 days credit for rebar supplies. But secondary steel producers themselves facing cash crunch are generally unwilling to accept bookings on credit terms, traders said.
Market sources said that integrated steel mills largely maintained prices at INR 38,700/mt ($501/mt) ex-works. However, some steel mills operating through stockyards located in some regions like Raipur in central India, Durgapur in the east were reportedly offering slight discounts ranging 2-3 percent to cope with variable low demand and liquidate high carrying costs in these locations.
The sources said that secondary rebar producers lowered prices by around INR 500/mt ($6/mt) to INR 31,000/mt ($408/mt) ex-stockyard, while continuing with discounts ranging around INR 1,000/mt ($12/mt), indicating pressures of inventories and weak demand from real estate and rural projects.
“No new housing projects will be launched for next few years. Developers are only focusing on completing ongoing projects and hence new demand for raw materials too will be limited. There are about 1.52 million housing units launched between 2013-19, which are still in various stages of completion across 7 major cities. These will be priority and there will be big disruptions in supplies of materials even after current round of lockdown ends on May 31 as all raw material supplies and buyers are in tight liquidity to ensure seamless supplies,” an official with Eden Realty said.
“We are participating supply tenders for all large government infrastructure projects. But the level of rebar bookings we are seeing at present is poor, our inventories would be sufficient to meet this demand for next couple of months,” a manager at Rashtriya Ispat Nigam Limited (RINL), a state run long product manufacturer said.
“Our approach of conversion of semis to rebar will be calibrated and phased depending on how rebar demand emerged after the lockdown as forecasting is extremely challenging,” he added.
$1= INR 75.90