The local Indian rebar market has staged a sharp rebound over the past week with prices surging across all regional markets amid active restocking by dealers and medium-scale buyers, with increasing retail prices reacting to the rise in coal prices, but several market participants have continued to remain cautious over the sustainability of the turnaround, SteelOrbis learned from trade and industry circles on Tuesday, February 22.
“Coal and energy prices are on an extended rising curve. Medium and small-scale secondary mills cannot wait for the market to stabilize at higher levels to pass on higher costs to consumers,” an official at an eastern India-based mill said.
“Most secondary mills have therefore effected a retail-end price hike of around INR 2,000/mt ($27/mt) or above. Strong restocking by dealers, however, has supported the market in absorbing higher prices as reflected in strong increases in trade prices. The question is whether this is sustainable in the medium term,” the official said, adding that demand from housing construction is still sluggish and real estate developers are cautious in maintaining high raw material inventories.
Sources said that ex-Mumbai rebar trade price is reported at INR 54,000/mt ($725/mt), up by around INR 2,400/mt ($32/mt), while the ex-Raipur price in the central regional market is reported at INR 51,500/mt ($691/mt), up INR 2,900/mt ($39/mt) on week-on-week basis.
In the eastern regional market of Rourkela, the trade price is reported at INR 52,500/mt ($705/mt), ex-warehouse, up INR 2,100/mt ($28/mt) over the past week.
“As a derived demand, it is difficult to explain the sluggish growth in demand of construction steel vis-à-vis the housing sector. Published reports show that during the first three quarters of April-December 2021, housing sales growth was 59 percent on year-on-year basis. This is despite several waves of the pandemic. But derived demand for steel has not matched such data,” a steel sector analyst with a Mumbai-based financial service advisory firm said.
“Our assessment is that buyers are preferring ready houses, and sales data reflect liquidation of inventories of housing completed and unsold from earlier years. New project launches are still sluggish and hence are reflected in the slow movement of construction raw materials,” he said.
$1 = INR 74.50
