A massive negative correction has been observed in the local Indian rebar market after unprecedented price increases early in the month, and the trade environment has fallen completely silent amid panic that end-users in construction and real estate development will not be able to factor in the previous huge price increases, SteelOrbis has learned from trade and industry circles.
A cost push had caused rebar prices to hit a historical peak, but this could trigger a demand recession or stagflation in key user industries like construction and housing sectors, and project deferment is already being heard across domestic regions, and could snowball into a widespread economic slowdown in key sectors.
The negative price correction has forced rebar trade prices to seek lower levels across all regions even amid negligible trades. Prices have fallen by INR 1,600/mt ($21/mt) to INR 69,100/mt ($902/mt) ex-Mumbai and are down to INR 64,000/mt ($836/mt) ex-Raipur in the central regional market, compared to INR 65,200/mt (851/mt) ex-warehouse a week ago.
In the eastern regional market of Rourkela, rebar prices are down by INR 4,300/mt ($56/mt) to INR 64,000/mt ($840/mt) ex-warehouse, trade circles said.
“Tender-based supply contracts have cost-escalation provisions of a maximum 5-6 percent. But long product prices have escalated almost 65 percent. We have no alternative but to stop participating in tender supply contracts,” a Kolkata-based distributor said.
“Trade and project sales have been seeing some post-pandemic revival. Price increases and risks of a demand recession have halted the entire revival process,” he said.
The National Real Estate Development Council has sought intervention by the government to check long steel product prices, which are beginning to force developers to slow down ongoing projects and defer the launch of new housing construction.
It pointed out that some cities in southern India have halted all construction work as they are in no position to increase housing costs by at least 25 percent to offset prices of inputs in residential housing construction.
$1 = INR 76.60