Pressures have continued to mount in the local Indian rebar market and prices of both primary and secondary producers have been seeking lower levels in reaction to the exponential growth in Covid-19 cases across several regions, a more limited easing of lockdown restrictions and the resumption of construction activities faltering.
According to sources, local governments in several regions of India have gone in for fresh lockdowns and in other regions the relaxations permitted from July 1 are far fewer and this is expected to limit the pace of resumption of the construction industry which is already facing challenges of labor, liquidity and logistics.
Under these circumstances, fresh bookings of rebar have fallen further during the past week for both primary and secondary producers, alongside supply-side pressures as several secondary steel mills have been progressively increasing plant production capacities.
Market sources said that integrated steel mills have cut prices by INR 500/mt ($7/mt) week on week to INR 35,500/mt ($470/mt) ex-stockyard. In the case of secondary producers, prices have been lowered by INR 200/mt ($3/mt) to 29,300/mt ($388/mt) ex-stockyard.
Sources have pointed out that, though booking volumes received by secondary steel mills have improved over the past fortnight riding on the revival of rural construction projects, the aggregate demand has failed to support prices since off-take was not commensurate to take care of oversupply in the market with a greater number of steel mills either resuming operations or increasing plant capacity utilizations.
“We do not see rebar demand reviving before at least two quarters. Pricing is not relevant anymore since construction activities are facing several challenges to reach optimal levels. The only way forward for integrated steel mills is to focus on semis, lower conversion capacities and optimizing export potential of semis like billets to maintain plant operation viability,” an official with state-run, predominantly long-product producer Rashtriya Ispat Nigam Limited (RINL) said.
$1 = INR 75.60