India: BF-rebar trade prices remain range-bound in slow market

• BF-rebar trade prices remain supported
  
  
• IF-rebar prices drop marginally
  
  

Trade-level blast furnace (BF) rebar prices remained range-bound on weekly basis across major market amid slow buying activities in the trade channel. Price levels remained supported as mills increased their list prices last week owing to production cuts. This week's rebar prices (12-32mm, Fe500D) in the trade segment rose w-o-w by INR 400/t ($5/t) to INR 52,400/t ($630/t) exy-Mumbai. Prices are exclusive of GST at 18%.

In the projects segment, prices were hovering around INR 50,000-50,500/t ($601-608/t) landed Mumbai basis. Buying activities have remained sluggish due to a liquidity crunch, as funding for infrastructure projects is halted in anticipation of the election code of conduct. Additionally, no new projects are expected to be announced during this period.

Factors behind market dynamics:

1. Production cut by tier-1 mills: After reducing the rebar production by 80,000-1,00,000 t in the preceding month, some of the tier-1 mills continued to curtail production by around 70,000-80,000 t this month also, informed market sources. This is one of the major factors keeping BF-rebar prices supported in the trade and projects segment and reduced inventories to three-month low levels. Furthermore, more production cuts are expected in April as market is likely to remain weak during Holi festive week and rising liquidity crunch ahead of elections.

2. IF rebar prices drop w-o-w: Induction Furnace (IF) route rebar trade prices dropped on weekly basis by INR 300/t ($4/t) to INR 49,200/t ($592/t) exw-Mumbai amid slow buying activities. Hefty bookings were not observed in last few days and manufacturers offered trade discounts. Current IF-rebar trade prices were assessed at INR 49,000/t ($590/t), exw-Mumbai. Furthermore, demand is likely to remain dull in coming days owing to Holi festive season. It must be noted that IF-based mills command 65-70% share in rebar market.

The gap between BF-IF rebars narrowed to INR 2,500-3,000/t ($30-36/t) in March as compared with INR 3,500-4,000/t ($42-48/t) in the previous month.

3. Infrastructure, construction demand: India's national highway construction for February 2024 showed an addition of 1,430 kms against 1,442 kms in the month ago period and 1,261 kms in the corresponding period last year (CPLY).

During the first eleven months of April 2023-February 2024 (FY'24), the highway construction totalled at 9,088 kms as compared with 8,064 kms in the CPLY according to data released by the Ministry of Road Transport and Highways (MoRTH).