Accentuating the divergent fortunes and outlooks between primary and secondary steel mills in India, the former have increased rebar prices during the past week on the back of strong long-term and tender supply contracts, while secondary sellers have continued to resort to discounted sales, SteelOrbis learned from trade and industry circles on Tuesday, May 25.
Sources said that integrated steel mills have increased rebar prices, in tandem with flat products, by around INR 2,000/mt ($28/mt) to INR 55,000-56,500/mt ($755-776/mt) ex-works, taking effective tradable prices to levels of around INR 60,000/mt ($824/mt) ex-Mumbai.
In contrast, secondary steel mills have continued to maintain prices at INR 50,000-51,000/mt ($687-700/mt) ex-works with reports of sellers pushing volumes in central and western regional markets at discounts ranging around two percent, sources said.
Traders and officials in steel mills said that the divergent pricing trends between primary and secondary rebar producers reflect the asymmetrical market dynamics of the two sectors.
It was pointed out that large integrated steel mills have had limited exposure to retail sales and are largely dependent on longer-term supply contracts against tenders and are largely insulated from the downturn as government projects like highway construction and infrastructure have been stepped up even during lockdown weeks.
In contrast, secondary steel mills with larger exposure to housing construction retail sales have been impacted worse as most real estate developers have either cut back project construction by half or are facing supply-chain disruptions for raw materials and a logjam in inter-state movement of material, forcing rebar sellers to continue to push volumes into the market at discounts.
$1 = INR 72.83
