Local Indian rebar producers, large and small-scale, have started to push up domestic prices supported by the slight revival of buying by the construction sector and large government-funded projects and the fall in inventory levels at large-scale integrated steel mills, SteelOrbis has been informed.
Market sources said that rebar inventories of large-scale rebar producing steel mills were down to around 700,000 mt in October, about 10-15 percent lower than in September.
According to the traders, both secondary and integrated steel mills have commenced attempts to push up rebar prices supported by fresh buying by large real estate developers of housing projects, particularly in northern India, and the emergence of fresh bookings by projects under construction by government agencies.
The sources said that small and medium-scale rebar producers have increased prices by INR 300/mt ($4/mt) to INR 32,500/mt ($459/mt) ex-stockyard. Large integrated steel mills have been more aggressive in revising prices amid expectations that demand from large projects will gain momentum and have hiked rebar prices by INR 800/mt ($11/mt) to INR 33,650/mt ($475/mt) ex-stockyard.
Dwelling on signs of a revival in the construction sector which accounts for 60 percent of domestic steel demand, a manager at Steel Authority of India Limited (SAIL) said that it was still too early to forecast that the fresh bookings seen in the past week would be sustained in the medium and long term. However, signals like greater participation of private equity in commercial construction and the government action plan for affordable housing hold the potential to reverse the sluggish demand for rebar seen over the past few months.
Large steel producers are attempting to push up prices more in hope rather than any definitive change in fundamental demand dynamics, the SAIL manager said. He said that large rebar producers are hoping that the government approving $6 billion of fresh funding to complete stalled construction projects across the country would generate fresh sales.
However, an official at an eastern India-based major rebar producer said that small and medium-scale producers will still struggle to push volumes at higher levels as these producers generally cater to demand in individual housing and small construction projects, which are still plagued by a shortage of funding and cost overruns.
$1 = INR 70.77