The local Indian rebar market has remained quiet amid thin activity and unchanged prices, with secondary mills waiting for softer billet prices to increase margins, SteelOrbis has learned from trade and industry circles.
With the revival of demand from key construction and real estate developers proving to be elusive and rebar prices seeing strong upside barriers, secondary mills are banking on integrated steel mills passing on the benefits of the fall in iron ore prices through lower merchant billet sale prices, which would improve their margins.
“At current soft rebar prices, the conversion margin range is as low as 5-12 percent depending on size of the mill. Operating at low levels of an average 50-60 percent, such low margins have impacted the profitability of all small and medium-sized mills,” a Kolkata-based mill operator said.
“In view of low volumes and weak prices, we are expecting integrated steel mills to pass on the benefits of the fall in iron ore prices through downward adjustments in billet prices. This will offer a short-term lifeline to secondary mills,” he added.
Traded rebar prices of secondary mills have remained unchanged at INR 49,500- 51,000/mt ($677-697/mt) ex-Mumbai.
Integrated steel mills have maintained prices at INR 54,000-55,000/mt ($738-752/mt) ex-works, but most mills have been heard to be offering discounts to keep pushing volumes in the market, ranging at two to three percent in western regional markets around Mumbai and higher at five to seven percent in eastern regional markets around Kolkata, sources said.
$1 = INR 73.10