Local Indian rebar prices have continued a slow-paced uptrend in the past week, with integrated steel mills increasing base prices marginally and secondary producers going in for a second consecutive hike, largely on expectations of increased activity from the construction sector, SteelOrbis has learned from trade and industry circles on Tuesday, August 3.
Integrated steel mills have increased prices marginally by around INR 1,000/mt ($14/mt) to take effective base prices to INR 54,500-55,000/mt ($733-739/mt).
Secondary mills too have been placing hopes on the expected rise in demand to go in for a price increase for the second consecutive week, although by a nominal amount of INR 500/mt ($7/mt) to INR 53,500/mt ($719/mt) ex-works.
“Rebar prices are being driven by costs and sentiments and not demand. Producers are increasing prices in reaction to surging iron ore and/or scrap prices. They are hoping that the higher prices will be absorbed by the market once construction activity gathers pace with the monsoon rainy season receding,” a Kolkata-based distributor said.
“Trading volumes continue to be sluggish with cautious and limited volume bookings seen from real estate developers, which is impacting the sales growth of secondary mills,” he added.
“High commodity prices are weighing on local secondary steel mills, which account for about 45 percent of Indian crude steel production. There are reports of some medium and small-sized mills either cutting capacity by 50 percent or closing down,” a steel sector analyst with a Mumbai-based financial services firm said.
“The reason being, on the production side, the absence of size makes such mills subject to high risks from rising input costs. On the output side, limited product portfolio and high dependency on retail sales in narrow regional markets expose them to even slight localized demand downturns. Also, unlike integrated steel mills, secondary mills generally do not have exposures in export markets to de-risk local market variations,” he added.
$1 = INR 74.40