Rebar prices of local Indian secondary steel mills have suffered serious setbacks during the past week amid rising inventories at both mills and the retail end, wıth prices slumping by INR 1,500-3,000/mt ($20-41/mt) and even more in some regional markets, SteelOrbis learned from trade and industry circles on Tuesday, August 31.
The tradable rebar prices have been heard at around INR 49,500/mt ($675/mt) ex-Mumbai, down from levels of INR 52,500/mt ($716/mt) ex-warehouse heard earlıer.
Prices are as low as INR 44,500/mt ($607/mt) ex-Raipur, a regional hub for secondary steel mills in central India, a near crash compared to the price of INR 52,000/mt ($709/mt) a week ago.
According to sources in trade circles, the rebar market is expected to continue to seek lower levels as the post-monsoon demand uptick has failed to materialize significantly and real estate development continues to languish, with builders unwilling to conclude bookings with secondary mills.
It has been learned that integrated steel mills have maintained rebar base prices at INR 54,000-55,000/mt ($736-750/mt) ex-works, but several market participants said that base prices are ‘notional’, since the highest-volume sales by mills were through tender bids to large projects where the lowest bids to secure supply contracts prices were at least 10-20 percent lower than base prices, and hence large mills have been able to keep pushing volumes in the market, while secondary mills more dependent on retail sales are facing strong inventory build-ups.
“The demand depression is a cause of concern because it is deepening as inventories are rising even with secondary producers’ mill capacity utilization levels averaging at 50-60 percent,” an official with the eastern region’s largest rebar producer said.
“Secondary producers are running out of options. Unless market conditions improve next quarter, closing down mills, particularly the medium-scale ones, will remain the only option,” he added.
$1 = INR 73.33