The local Indian rebar market has firmly moved into a bullish trend during the past week, with prices surging in reaction to a cost-push from inputs, a further tightening of supplies with secondary producers hamstrung in increasing production, and integrated steel mills increasing prices for their premium-branded products, traders said on Tuesday, December 22.
Market sources said that integrated steel mills have increased rebar prices by INR 2,000/mt ($27/mt) to levels of INR 43,500-44,000/mt ($589-596/mt) ex-stockyard. The sources said that in select regional markets in the west around Delhi and the National Capital Region (NCR) in the north premium-branded 8 mm rebar is being quoted at a premium higher by around INR 1,500/mt ($20/mt).
It was pointed out by sources that, apart from the cost push, integrated steel mills with better captive raw material sources are pushing up prices as supplies are tightening since secondary rebar producers are unable to increase production and meet demand due to the raw material crisis, particularly in wake of rising prices of iron ore, semis (billet) and scrap.
Secondary steel mills have also hiked their prices, by INR 2,000/mt ($27/mt) to levels of around INR 38,000/mt ($515/mt) ex-stockyard, the sources said.
An indication of the impact of rising prices and the tightening of rebar supplies is reported from the southern Indian state of Tamil Nadu where the government-run National Highway Authority of India Limited (NHAI) said that road project costs have escalated 10 percent over the past 45 days due to the impact of rising steel prices.
At least two market participants said that secondary steel mills are unable to meet delivery schedules as their production planning has been hit by uncertainties in sourcing key inputs like scrap at higher prices or billets, merchant sales of which from integrated steel mills have fallen sharply over past weeks.
“The surging rebar prices are not all positive for secondary steel mills. While much of the increased prices is due to the cost push, secondary steel mills are unable to sufficiently build up raw material inventories as shortages are mounting and production cannot be planned in line with the demand increase,” an official at eastern India’s largest rebar producer said.
“Prices are going up too fast driven by costs. This is leading to construction and real estate development cost-escalations and there is a strong pushback from our buyers. Ultimately if the prices increase unabated, buyers will have no option but to cut down on bookings, which again will make the present uptrend unsustainable. We want stability in the market to ensure long-term viability of our operations,” he added.
$1 = INR 73.80