Over the past week, local rebar trade-level prices in India have showed some of their biggest gains in recent months in reaction to the large price hikes announced by integrated mills backed by the tightening of supplies from secondary mills facing energy supply disruptions, and aggressive procurement bordering on panic amid fears of aggravated shortages, SteelOrbis learned from trade and industry circles on Tuesday, April 7.
Sources said that large integrated mills have hiked long product prices by an average of INR 2,000/mt ($21/mt), citing rising input costs, while secondary mills were heard to be facing challenges in maintaining output levels amid rising sponge iron costs and disruptions in supplies of scrap, with yards facing a shortage of gas supplies for cutting operations.
Rebar trade prices have surged INR 2,400/mt ($26/mt) to INR 54,000/mt ($580/mt) ex-Mumbai and have shot up INR 1,800/mt ($19/mt) to INR 53,500/mt ($575/mt) ex-Chennai in the south.
Meanwhile, rebar trade prices are up INR 400/mt ($4/mt) to INR 48,400/mt ($520/mt) ex-Raipur and have gained INR 700/mt ($8/mt) to INR 47,700/mt ($513/mt) ex-Durgapur in the east.
According to market participants, several producers have been reporting low inventories as mills are facing disruptions in supplies of inputs and energy, and are hard pressed to maintain output levels, resulting in a squeeze of the flow of rebar from mills to the market. At the same time, more aggressive buying has been reported from the market, attributed to panic in the segment of user industries, anticipating a further aggravation on the supply side.
“Prices are reacting to a rapidly emerging shortage situation. It is mostly a cost-driven market. In the medium term, this risks an inflationary pressure build-up and a demand depression. This kind of volatility is not a positive for either the buyer or the seller,” a Kolkata-based distributor said.
$1 = INR 92.97
