The divergent trends in the local Indian rebar market have been accentuated further during the past week with the price differentials of large producers and the small and medium-scale production segment widening further in reaction to the differing demand profile among user sectors, SteelOrbis learned on Tuesday, January 14.
While most large integrated rebar producers have increased prices for the third consecutive week, backed by the sharp fall in inventories and the demand uptick from large government-funded infrastructure projects, small and medium-scale producers have been forced to lower prices, responding to sluggish sales in their primary user segment - the housing construction industry.
Market sources said that large rebar producers like Rashtriya Ispat Nigam Limited (RINL), Tata Steel, JSW Limited and Steel Authority of India Limited (SAIL) have all increased base rebar prices by INR 1,000/mt ($14/mt), while rebar prices from small and medium-scale suppliers have declined by INR 500/mt ($7/mt) during the past week. The sources said that rebar prices of large integrated steel mills are at around INR 37,500/mt ($529/mt) ex-stockyard. However, in contrast, the rebar prices of small and medium-scale steel mills are at INR 32.100/mt ($453/mt) ex-stockyard.
“Large steel mills are riding on improved off-take from large government projects, enabling them to sharply lower inventories during November-December 2019 at an estimated 25-30 percent. The government is committed to large funding of new infrastructure projects over the next five years and this will trigger a sustained demand revival for rebar and support higher prices,” a manager at an eastern Indian steel mill said.
However, sources said that the housing construction sector, largely unorganized and the main demand source for small and medium-scale rebar producing steel mills are still starved of funding and are not amenable to the government stimulus and hence are facing slow movement of stocks, with the piling up of stocks putting pressures on their prices, which are mostly for retail sales or for lower volumes to housing construction companies.
$1 = INR 70.90