Indian domestic integrated steel mills and secondary producers have been compelled to increase local rebar prices to offset rising input costs even at the risk of aggravating the slowdown in stock movement, SteelOrbis was informed on Tuesday, August 25.
Market sources said that integrated steel mills have increased their rebar prices by INR 500/mt ($7/mt) week on week to INR 36,200/mt ($487/mt) ex-stockyard, while secondary rebar producers have increased prices by INR 1,000/mt ($14/mt) to INR 30,400/mt ($409/mt) ex-stockyard.
Domestic iron ore prices across grades have increased by 35 percent in India since April and import scrap prices have increased far above $300/mt CFR. “Even at the current low rebar prices producers, particularly secondary steel mills with a predominantly long product portfolio, have no headroom any more to absorb rising input costs. Risks of a further slowdown in stock movement are inevitable as producers will need to maintain operational viability and avoid defaults in repayment of debt liabilities,” an official at Shyam Steel, eastern India’s largest rebar producer, said.
Sources at private steel mills said that, while integrated steel mills with a diversified long and flat product portfolio are better placed to absorb higher input costs in view of rising flat product prices, secondary mills which are largely long product players are taking a hit from the negatives of rising input costs and sluggish demand from key user industries like housing construction and real estate developers and sustained low rebar prices.
The ministry of finance last week approved the disbursal of fresh lending to the tune of $1.38 billion from special government funding for 101 stressed large housing projects, but sources said that this is too insufficient and largely confined to big builders in urban areas whereas a demand stimulus is required in semi-urban areas, the key market for secondary rebar producers in terms of retail sales.
$1 = INR 74.30