Stung by buyers’ concerted resistance led by large real estate developers refraining from concluding new bookings, Indian integrated steel mills have reduced their rebar prices, while secondary producers have still been assessing market conditions before taking a pricing decision, SteelOrbis has learned from trade and industry sources.
The sources said that integrated steel mills have reduced prices by around INR 1,000/mt ($14/mt), taking the base price for rebar to around INR 48,500/mt ($664/mt) ex-works.
However, secondary rebar producers have maintained prices at around INR 47,000/mt ($643/mt) ex-works, with sources saying that medium-scale producers have still to gain benefits from the fall in imported scrap and local billet prices and have been taking time in assessing their new pricing structure, factoring in such benefits.
However, a number of market intermediaries have averred that, despite the reduction in price by integrated steel mills, it has failed to have any salutary impact on overall negative sentiments in the long steel products market, with real estate developers claiming that prices are still too high and need a more drastic correction before fresh bookings could revive.
According to a steel sector analyst with a financial services firm, the long steel market is sharply divided between negative near-term sentiment and a more positive medium and long-term outlook.
It has been pointed out that, though the cost of inputs like scrap and billet is showing signs of cooling down, it is not yet clear how much of its benefit secondary rebar producers would be able to pass on to their customers through lower rebar prices as many of the producers are still under financial stress from the impact of the pandemic in the current year.
High prices in the near term would continue to be a point of conflict between sellers and buyers among real estate developers, he said.
However, in the medium and longer term, the government increasing infrastructure spending by 24 percent over the next fiscal year, as provided for in the national budget, the (at least) 500 new projects under the National Infrastructure Pipeline (NIP) program of the government and the setting up of specialized Development Financial Institutions (DIFs) to offer long-term lending to infrastructure projects would spur demand for construction grade steel.
Under these circumstances, local rebar prices will continue to show mixed trends and prices will move in a narrow range in either direction, until longer-term demand generation starts to yield results.
$1 = INR 73.00