India: BF-route rebar trade prices decline for 16th week in a row

Trade level prices of rebars made through blast furnace (BF)-route continued to decline week-on-week (w-o-w) across major markets. Notably, trade prices have been falling for the sixteenth consecutive week in a row, SteelMint's data showed.

Current rebar trade segment prices dropped by INR 600/t ($7/t) w-o-w to INR 55,800/t ($675/t), exy-Mumbai, as per SteelMint's assessment on 26 May, 2023. Prices are excluding GST at 18%.

Offers in the projects segment are hovering in the range of INR 55,500-56,000/t ($672-678/t) FOR Mumbai.

Factors dragging prices downwards

1. Softening of raw material prices: Prices of key steelmaking raw materials i.e, iron ore and coking coal have dropped w-o-w.

For instance, SteelMint's weekly Odisha iron ore fines Fe 63% index dropped by INR 200/t ($2/t) w-o-w at INR 5,700/t ($69/t) ex-mines as on 20 May, 2023.

Australian premium hard coking coal (HCC) prices dropped by $13/t w-o-w to a weekly average of $245/t CNF India for the week ending 20 May as compared with $258/t in the preceding week. Buyers moved to sidelines amid falling prices and demand from China remaining slow. Prices fell to an average of $248/t m-o-m in May from $290/t in April.

2. Drop in IF-route rebar prices: IF-route rebar trade prices dropped by INR 500/t ($6/t) to weekly average of INR 53,500/t ($647/t) exw-Mumbai against INR 54,000/t ($653/t) last week. Limited buying activities in the spot market and fluctuations in prices of billet and sponge iron have weighed on prices and manufacturers have given trade discounts to liquidate inventories. It may be noted here that IF-route rebars enjoy a domestic market share of around 65-70%, as per SteelMint's assessment.

The gap between BF-IF route rebars stood at INR 3,000-3,500/t ($36-42/t) in the key market of Mumbai.

3. Subdued global sentiments: Steelmakers in various countries have announced reduction in rebar offers due to fall in raw material prices, and sluggish demand which turned global sentiments negative.

Weaker than expected demand in China has led steelmaker, Shagang steel, to cut rebar prices by RMB 50/t ($7/t) to RMB 3,950/t ($560/t) for late-May sales. This marks the fifth consecutive price cut by the company.

Outlook

Prices are likely to remain under pressure and decline further in the near-term as market participants have adopted a wait-and-watch strategy awaiting mills' price announcement slated for June.

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