Divergent trends have persisted in the local Indian rebar market with differentials between prices of large producers and those of small and medium-scale producers widening further from differing demand profiles among user industries, SteelOrbis learned on Tuesday, January 21.
While large integrated steel mills have been pushing up rebar prices supported by low inventories and strong bookings from large projects, prices of small and medium-size mills have been softening due to slow stock movements, sustained sluggishness of retail sales and low demand from key user segments like housing construction.
Market sources said that rebar prices of large integrated steel mills are up INR 300/mt ($4/mt) week on week to INR 37,800/mt ($532/mt) ex-stockyard.
However, the prices of small and medium-scale steel mills are down INR 200/mt ($3/mt) week on week to INR 31,900/mt ($449/mt) ex-stockyard. Sources said that most of these small and medium rebar producers have faced a fall in inquiries during the past week and have been forced to lower prices to control inventories. The housing construction sector is still facing a shortage of debt funding from financial institutions and unsold housing stocks have been rising and, with no new projects starting, bookings for raw materials like rebar from small producers have been at a very low level.
According to an industry report, housing sales fell 30 percent in the October-December quarter, compared to the corresponding period of the previous fiscal year. New housing projects launched during the period also declined to 41,133 units across the country during the quarter down from 73,266 units in the corresponding period of the previous year, with sources pointing out that this was being reflected in a slowdown in rebar bookings of small and medium producers.
However, government-funded projects have been taking off, triggering an increase in bookings for rebar from large producers, enabling them to keep pushing up prices, the sources said.
“We as a pure long product steel company are seeing good stock movement since early December. Industry average inventories of rebar are estimated to have fallen 25 percent over the past few weeks on strong bookings by government projects,” a manager at Rashtriya Ispat Nigam Limited (RINL) said.
“Some large mills like us are also selling to neighboring markets like Nepal and Bangladesh, which has helped lower inventories and increase prices,” he added.
$1 = INR 71.10