The local Indian rebar market has started to show divergent trends during the past week with integrated large producers increasing prices sharply, medium and small-scale producers lowered their prices, indicating uncertainties surrounding demand in specific user segments, SteelOrbis learned on Tuesday, January 7.
Market sources said that most large integrated steel mills have increased prices by INR 1,500/mt ($21/mt) to INR 36,500/mt ($508/mt) ex-stockyard. With this, large steel mills have effected a cumulative price hike of INR 2,500/mt ($38/mt) over the past two consecutive week, largely in expectation of greater bookings from infrastructure projects.
The large steel mills which are major suppliers to infrastructure project are extremely buoyant after the Indian government during the past week announced that it would invest an estimated $4.5 trillion over the next five years in projects to be funded under a scheme called the “National Infrastructure Pipeline” and this would trigger huge demand in construction projects supporting demand for long steel products.
However, rebar producers in the small and medium-scale segments have lowered prices by INR 700/mt ($10/mt) to INR 32,600/mt ($453/mt) ex-stockyard. In effect, the lowering of prices was a rollback of an equivalent hike in rebar prices by small and medium-scale producers in the previous week.
The divergent pricing seen in the market was largely attributed to disparate demand trends across differing user industries. With the government committing to spending on infrastructure, large producers became more bulllish and aggressively pushed up rebar prices in anticipation. However, in contrast, small and medium-scale rebar producers, largely suppliers to the housing sector and dependent on retail sales, are not seeing any immediate demand uptick as housing construction by private real estate builders still continues to suffer from financing issues, the sources added.
“Government procurement is steadily rising and this has enabled producers to liquidate stocks comfortably. We have lowered our stocks by 30-35 percent over the past month and this is enabling producers to push up prices as the outlook for government projects is very bullish,” a manager at Rashtriya Ispat Nigam Limited (RINL) said.