The local Indian rebar market has witnessed a significant improvement in prices and sentiments amid the strong positive indications of a revival of the rural economy, SteelOrbis has learned on Tuesday, July 14.
According to sources, it is clear that the rural economy is bouncing back faster than urban areas as reflected by indicators like high sales of tractors and farm equipment, and increased activity of government-led rural infrastructure projects leading to rebar producers seeing an uptick in fresh bookings and much higher optimism over demand improvements in the near term.
Market sources said that integrated steel mills have increased their rebar prices by INR 500/mt ($7/mt) during the past week to INR 35,700/mt ($474/mt) ex-stockyard.
They said that rebar producers in the small and medium segment, which were the primary suppliers to the rural sector, have been more aggressive, increasing their prices by INR 1,000/mt ($13/mt) to INR 29,900/mt ($398/mt) ex-stockyard, responding to strong bookings from government-funded projects and expectations of these bookings gaining momentum over the coming weeks.
“There were early signs last week of some pent-up demand in the long product segments where projects were nearing completion and this is supporting a large number of long product producers in their attempt to resume normal production,” an official at a financial information and rating agency said.
“The long products market will see a faster recovery in prices compared to flat products, largely owing to lower comparative costs of production and better realizations from state-funded projects,” he said.
“We see multiple reasons for the rural economy to recover faster than the urban economy. We have seen a good monsoon and a good harvest. Labor is available in rural areas and the government is increasing rural expenditure,” T V Narendran, CEO of Tata Steel, said in a statement.
“We have been able to increase long product prices. We are optimistic that if current prices are sustained we will be able to successfully reduce inventories and bring back the demand-supply balance in the market,” an official at Rashtriya Ispat Nigam Limited (RINL), an exclusive long product producer, said.
“We are seeing stalled projects in construction and infrastructure coming back into the market to restock material. We will be cautious but at the same time take advantage to re-look at rebar prices strategically, to improve our realizations and reduce inventory-carrying costs over the next few weeks,” he added.
$1 = INR 75.20