Indian rebar prices continue to extend losses, touch 24-month low

Tuesday, 20 August 2019 10:12:25 (GMT+3)   |   Kolkata

Indian domestic thermo-mechanically-treated (TMT) rebar prices have continued to extend their losses hitting a new 24-month low amid a combination of a further slowdown in construction activity as rains and floods hit several parts of the country, a lack of export shipments, a drop in retail sales to minimum levels and a fall in government off-take, traders said on Tuesday, August 20.

According to traders, small and medium-scale rebar producers have taken the biggest hit from the slowdown, reducing prices by INR 400/mt during the past week to INR 32,700/mt ($456/mt) ex-stockyard in eastern regional markets around Kolkata.

However, price reductions from large rebar producers have been comparatively limited, down INR 100/mt week on week to INR 33,000/mt ($462/mt) ex-stockyards in northern regional markets around Delhi, the traders said.

Larger producers are relatively better equipped to cope with the downturn as they have part of their production linked to government supply contracts, whereas small and medium-scale rebar producers, mostly concentrated in the eastern region, rely more on B2C (business to consumer) and retail sales which are first to react to depressed market conditions. At the same time, several of these retail sales-dependant rebar producers still have to sustain their sales and marketing expenses to be able to keep pushing volumes to small retail buyers, the traders said.

“Floods situations have been aggravated stretching from Kerala state in southern India to Himachal Pradesh in northern India. Construction activities have come to a near halt and there are very little bookings from large project executers, leading to rising inventories and pushing prices to a 24-month low,” an official with Shyam Steel, the largest rebar producer in the east, said.

“This year the situation during the rainy season has been further aggravated with a sharper fall in demand from the housing construction sector which generally used to be relatively immune to seasonal variations. A large number of real estate developers have been facing problems of securing funding in the wake of the current crisis in non-banking financial companies (NBFCs) and most housing projects are facing time overruns and hence the lower off-take of construction materials,” the Shyam Steel official added.

Market sources said the export market too has dried up, citing the example of Bangladesh where rebar prices have fallen by 15-20 percent over the past two months and virtually no eastern Indian producers have been successful in concluding export contracts to any of the neighboring markets.Offer prices from medium scale producers in eastern region ranged at $450-455/mt FOB, while offers from large producers were at $10/mt higher.

$1 = INR 71.64

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