Despite sustained weak demand from the construction and housing sector, medium and small-scale secondary Indian rebar producers have continued attempts to push up prices to offset rising input costs despite risks of a rise in inventories, while large integrated steel mills have maintained their prices unchanged, SteelOrbis has learned on Tuesday, February 25.
Secondary small and medium-scale rebar producers have increased prices for the second consecutive week - by INR 200/mt ($3/mt) to INR 33,200/mt ($461/mt) ex-stockyard. The sources said that some secondary rebar producers located around the central state of Chhattigarh have resorted to higher price hikes of around INR 500/mt ($7/mt) to around INR 33,500/mt ($465/mt) ex-stockyard. Large integrated steel mills have kept prices stable at INR 38,800-39,300/mt ($539-546/mt) ex-stockyard.
Small and medium-scale rebar producers have been facing heavy pressure from costs and have been left with little option but to attempt to pass on higher costs to consumers, even risking a further slowdown in stock movements and an inventory build-up.
Even integrated steel mills have been facing the same cost pressure, but are comparatively better placed to absorb higher input costs in the short term as supplies to big projects have ensured a better cash flow.
Sentiments in the market were also impacted by rating agency India Research (Ind-Ra) putting the outlook for the construction sector as ‘negative’ for the next fiscal year, citing poor credit availability from financial institutions, negative free cash flow in project implementation, stricter regulatory compliance, and delays by banks in increasing working capital limits for construction companies.
“Rebar prices in the local market have an upside potential of another INR 500/mt ($7/mt) over the next few weeks as producers will continue to try passing on higher input costs to end-users. But this pricing based on cost plus basis is unsustainable in the absence of a demand uptick,” a manager with Rasntriya Ispat Nigam Limited said.
$1 = INR 72.00