Tentative signs of a revival have emerged in the local Indian rebar market with producers attempting to nudge up prices in expectation of an uptick in demand as construction activities have been permitted to resume in rural areas, mostly in ‘green zones’, and work is slated to commence on large government infrastructure projects, SteelOrbis learned on Tuesday, May 5.
Market sources said that large integrated long steel producers have increased prices of inventory sales by INR 1,000/mt ($13/mt) week on week to INR 39,200/mt ($518/mt) ex-stockyard, while small and medium secondary producers have increased prices by INR 200/mt ($3/mt) to INR 31,800/mt ($420/mt) ex-stockyard.
The sources said that the government has permitted resumption of construction activities in rural areas and that small and medium rebar producers are expecting a modest revival in demand as the government is expected to renew efforts in getting construction of affordable housing construction, so as to offer employment opportunities to the large number of migrant laborers now back in their villages in rural India.
Catering largely to housing construction and retail sales, any resumption of construction in the rural belt would revive demand for rebar and small and medium producers were seizing on this expectation to push up prices of inventory products, even as their plants are either closed or operating at minimal capacity utilizations.
Reports trickling into the market suggest that work on housing projects in northern India around the capital New Delhi and Noida in the neighboring state of Uttar Pradesh, both in high risk zones, are being reactivated, but construction companies have been unable to speed up work owing to the shortage of manpower. Nevertheless, even indications of construction starting have boosted sentiments and hopes of a demand revival among rebar producers, traders said.
Several other states like Telangana, Andhra Pradesh, Odisha have all sanctioned resumption of construction activities and movement of construction materials across ‘green’ and ‘orange’ zones, triggering hopes among producers of being able to start liquidating inventories in higher volumes over the next few weeks.
However, a steel sector analyst at a Mumbai-based financial advisory services firm has cautioned against rising expectations, maintaining that construction companies will be hamstrung in getting project work underway, owing to the acute shortage of labor and manpower.
He said that most construction companies rely on engaging contract laborers provided by private agencies and most of such migrant laborers had fled to their rural homes and the shortage of manpower would prevent construction companies from restocking raw materials in any significant volumes as project implementation will continue at a slow pace.
$1 = INR 75.70