Local Indian rebar prices have continued to show signs of consolidating their recent recovery with prices edging up and improving sentiments among secondary producers anticipating a demand surge from the affordable housing construction sector, traders said on Tuesday, December 15.
They said that, most significantly, rebar prices of secondary steel mills showed stronger gains during the past week, while integrated steel mills maintained their prices.
Leading secondary producers said that several state governments are taking active moves in changing housing development statutory legal requirements in favour of real estate developers, which could increase supplies of affordable housing by 100 percent over the medium term leading to a demand revival for rebar.
They said that secondary steel mills, with significant dependency on real estate development for demand, are already seeing higher bookings particularly in western regional markets around Mumbai and in the south where developers have been more active in restarting housing projects.
Sources said that integrated steel mills have maintained rebar prices in the range of INR 41,500-42,000/mt ($564-571/mt) ex-stockyard, but secondary producers’ rebar prices have firmed up by INR 1,000/mt ($14/mt) at INR 36,000/mt ($489/mt) ex-stockyard on back of stronger off-take particularly in western and southern regional markets where some reports indicate the tradable price to be at least INR 500/mt ($7/mt) higher.
The rise in rebar prices over consecutive weeks has triggered apprehensions over an escalation in project costs by several industry players, with some even suggesting that the rebar market is showing signs of tightening supplies to key consumers.
A builders association in northern India claimed that housing construction costs have increased by about 10 percent following the recent price hikes by secondary rebar producers.
The government-run National Highway Authority of India Limited (NHAI) has also claimed that it has been receiving reports of delayed deliveries at certain project sites across the country. As regards escalating prices, it said that most projects undertaken by NHAI have some in-built provisions to absorb higher input costs but, if rebar prices continue to rise, such provisions will not be sufficient and necessary changes will need to be made in project cost escalations, an NHAI official said.
$1 = INR 73.60