Local Indian rebar prices have continued to move down over the past week, with a further weakening of demand forcing secondary mills to drop prices and offer extended credit terms to keep stocks moving in the market, while there has been a near halt of restocking by distributors who are saddled with rising inventories and locked working capital, SteelOrbis learned from trade and industry circles on Tuesday, June 9.
Sources said that rebar trade-level prices are down INR 200/mt ($2/mt) to INR 45,800/mt ($479/mt) ex-Mumbai and are down sharply by INR 1,000/mt ($10/mt) to INR 46,000/mt ($481/mt) ex-Chennai in the south.
Rebar trade prices have lost INR 500/mt ($5/mt) to INR 41,200/mt ($431/mt) ex-Raipur and are down INR 200/mt ($2/mt) to INR 41,100/mt ($430/mt) ex-Durgapur in the east.
According to the sources, medium-sized secondary mills have been in a quandary, facing low demand and declining prices at a time when the cost of production has been rising. Several of these mills have been dropping prices and offering extended credit terms to keep pushing volumes into the market to improve cash liquidity, which has taken precedence over protecting margins in a steadily falling market.
A section of the market said that information available from secondary mills said that average inventories have increased to a range of 15-20 days against the normal range of 5-10 days. With margins already close to negative from rising production costs, high inventories have resulted in a serious cash flow situation for producers.
“With neither retail nor large players active in the market, sellers are fighting a losing battle by adjusting pricing. When current and projected demand are both seen as negative, pricing has lost much of its effectiveness in driving sales. It is only a matter of time before secondary mills consider further output cuts,” a Kolkata-based distributor said.
$1 = INR 95.55
