Indian rebar prices trend upwards driven by higher costs

Tuesday, 03 November 2020 16:40:42 (GMT+3)   |   Kolkata
       

Local Indian rebar prices have trended upwards during the past week in response to integrated steel mills taking the lead to increase long product prices from the current month and secondary producers also commencing price hikes in reaction to sharp surges in prices of merchant selling prices of billets, despite risking a further slowdown in bookings.

Sources told SteelOrbis that, with rebar prices at recent lows, producers have no alternative but to risk a further slowdown in order to compensate for rising input costs of iron ore and billets, if margins from rebar sales are to be kept positive.

Market sources said that at least three integrated steel mills have increased rebar prices by around INR 1,000/mt ($13/mt) to around INR 38,450-38,700/mt ($517-520/mt) ex-stockyard. Secondary producers in the western region have reported price hikes of around INR 500/mt ($7/mt) or slightly above to INR 31,200-31,500/mt ($419-425/mt) ex-stockyard.

 “Prices are being entirely cost-driven at present. The primary aim of producers, large and small, is to keep sales margins positive and hence there is no alternative to passing on higher input costs to consumers even at the risk of a rise in inventories as demand remains sluggish, particularly from the housing construction sector and the primary market for secondary producers,” an official at Shyam Steel, eastern India’s largest rebar producer, said.

According to another official at a government-run long steel product manufacturer, rebar producers are taking their cue from the revival in cement demand and the offtake from retail channels, except for southern India, as indications are that higher rebar prices could be absorbed by the market towards the end of the current quarter, as both the inputs, cement and rebar, functioned on derived demand from the construction industry.

However, maintaining a contrarian view, at least two large rebar trading firms said that, considering high inventories at both retail and producers’ ends, the risk of discounting emerging in the market in response to the latest round of price increases could not be ruled out, if significant fresh bookings do not emerge now that the monsoon season has ended enabling construction work to gain momentum.


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