Local Indian rebar market has showed divergent trends, reflecting the varying impact of the lockdown on primary and secondary producers with the former largely maintaining higher prices, while secondary sellers have begun to resort to discounting to overcome the near halt in procurement activities from the housing construction sector, SteelOrbis learned from trade and industry circles on Tuesday, May 18.
Sources said that large integrated steel mills are somewhat insulated from the demand depression and restrictions on the movement of material by their medium and long-term supply contracts to larger projects based on tendering.
However, secondary rebar producers, predominantly dependent on sales to smaller housing and construction projects, have been harder hit, with builders almost halting fresh bookings and rebar sellers forced to resort to discounting to force movement of inventories to the market.
Integrated steel mills with their larger product portfolio and longer-term supply contracts have been maintaining rebar prices at INR 53,000-54,500/mt ($724-745/mt) ex-works and the tradable price has reached INR 58,000/mt ($792/mt) ex-Mumbai.
However, in contrast, secondary sellers have maintained base prices in the range of INR 50,000-51,000/mt ($683-697/mt) ex-works, but the tradable price was heard in the central and western regions at a discount in the range of two to five percent as mills attempted to push through deals to keep inventories in check.
At least two traders opined that integrated steel mills are anticipating that the demand weakness in the rebar market will be partially offset over the current quarter by a slight fall in aggregate output resulting from the shortage of oxygen at present. However, in contrast rebar producers in the small and medium scale secondary sector have limited holding capacity to cope with the virtual drying up of bookings from retail sales to the housing sector and hence have been resorting to discounts to keep pushing volumes in the market and maintain cash flows.
$1 = INR 73.20
