The local Indian rebar market has started showing signs of cooling down over the past week with premiums dipping slightly as key user segments like builders and construction companies sharply reduced or halted fresh bookings, showing resistance to skyrocketing prices, but the market is still divided on whether this can trigger a definitive correction, sources told SteelOrbis on Tuesday, January 26.
The market sources said that several user industries like builders in the southern and western regional markets have been uniting to protest “unreasonable” premiums being charged by both producers and dealers, with several medium and large users stopping fresh bookings either as protest or due to shortage of liquidity for restocking.
However, several market participants are unsure whether the slight downturn in prices and buyers’ resistance could trigger a market correction, since the fundamental of the demand-supply mismatch has been underpinning movement of the market towards higher levels on a sustained basis.
Market sources said that rebar prices of integrated steel mills have been maintained at around INR 49,500/mt ($678/mt) ex-stockyard, with premiums reported at INR 1,000/mt ($14/mt), down from INR 2,000-3,000/mt ($27-41/mt) a week ago.
Rebar prices of secondary producers have remained unchanged at around INR 47,000/mt ($643/mt) ex-stockyard, but tradable premiums are reported from key markets at around INR 500/mt ($7/mt), down from levels of INR 2,000/mt ($27/mt) a week ago, the sources said.
The market perception showed sharp divisions between sellers and buyers. “The lot of noise being made about high prices is very unreasonable. On the supply side, there is not enough production from secondary producers, facing high raw material prices, hence rising demand and low supplies are fueling prices. On the production side, raw material prices are rising, pushing up prices. It is not that margins of producers have increased commensurate with higher prices,” an official at JSW Steel Limited said.
In contrast, a leading Chennai-based builder said, “After a rebound following the lifting of lockdown restrictions, housing and construction are on a slowdown again in the face of a shortage and high prices of rebars, rods and wires.”
“No medium and small-scale real estate developer and construction companies have liquidity to restock at the current high prices and have no alternative but to either reduce or halt fresh bookings, thereby impacting their project gestation period,” he added.
$1 = INR 73.00