Despite Indian producers maintaining their official rebar offer prices, a sharp divergence has emerged in the local Indian rebar market with sections of secondary producers and market intermediaries offering discounts to sustain stock movements amid persistent sluggish demand from key segments like housing.
Integrated steel mills which had increased base prices in earlier weeks have maintained prices at INR 36,950/mt ($503/mt) ex-stockyard, while secondary producers have also kept prices unchanged, at INR 30,700/mt ($418/mt) ex-stockyard.
However, trading volumes fell sharply following the recent price increases, indicating that key sectors like housing neither have the appetite nor liquidity to restock construction inputs at higher prices, forcing the resumption of discounting by traders and secondary producers, resulting in regional divergence in rebar prices.
Citing examples, market sources said that rebar prices of secondary steel mills in eastern regional markets around Durgapur have been reported at INR 30,500/mt ($415/mt) ex-stockyard net of discounts.
Similarly, rebar prices of integrated steel mills for sales in western regional markets around Mumbai have been quoted at around INR 36,700/mt ($500/mt) ex-stockyard net of discounts.
According to a real estate sector analyst, housing construction projects undertaken by large corporate developers had resumed in northern and eastern regions, but this has had little impact on rebar trade prices as such developers normally procure their raw materials through negotiated deals with large integrated steel mills, which are lower than the market-traded price levels.
However, the worst-hit have been the secondary steel mills buffeted on the one hand by high raw material prices, while the demand revival in rural and semi-urban areas has taken a fresh hit from rising cases of the pandemic deep in the hinterland, market sources said.
$1 = INR 73.40