India: BF-route rebar trade prices drop by INR 400/t ($5/t) w-o-w amid slow demand

Trade-level prices of rebars produced through the blast furnace (BF) route dropped w-o-w across markets, as per SteelMint assessment. Current prices of BF-route rebar were assessed at INR 62,800/t ($758/t) as on 17 February, 2023, down marginally by INR 400/t ($5/t) against previous week's price levels. Prices mentioned are exy-Mumbai, excluding GST at 18%.

Factors keeping prices range-bound:

1. Raw material prices: Prices of steelmaking raw materials like iron ore fines remained unchanged w-o-w, while coking coal prices continued to rise further this week.

SteelMint's weekly Odisha iron ore fines Fe 63% index remained stable w-o-w at INR 5,750/t ($69/t) ex-mines as on 11 February. Prices have risen by INR 650/t ($8/t) against INR 5,100/t ($62/t) seen during the first week of January.

The weekly average price of Australian-origin premium hard coking coal (HCC) increased by $20/t w-o-w to a weekly average of $376/t CNF India for the week ending 11 February. Prices have risen by around $60/t from $315/t CNF India in the first week of January.

2. IF rebar prices: Induction furnace (IF) route rebar trade prices have remained volatile since the begining of the month. Prices have fallen to INR 56,100/t ($678/t) exw-Mumbai as on 11 February against INR 58,400/t ($705/t) seen on 6 Febraury. Meanwhile, with improved sales volumes and gains in prices of semi-finished steel products, prices of IF route rebar have rebounded by around INR 500/t ($6/t) in the last few days and were assessed at INR 56,600/t ($684/t) on 17 Febraury. It should be noted that IF route rebar have a 65-70% market share in India.

The spread between BF-IF route rebar has further widened to around INR 6,000-6,500/t ($72-78/t) this month against the monthly average gap of INR 3,000-3,500/t ($36-42/t) seen last month. Furthermore, the increase in the gap between the two is switching the preference of buyers to IF-route rebar.

3. Destocking activity: Demand for BF-route rebar started to slow down since the begining of this month when mills announced a hike of INR 1,500/t ($18/t) in rebar list prices. As a result, participants in the distribution network started to offload their inventories which they have stocked in good volumes amid healthy demand in January. This is now exerting pressure on trade-level prices which have witnessed a marginal fall in the last two weeks.

Meanwhile, demand from the projects segment has remained steady and current prices are at around INR 64,000/t ($773/t) FOR Mumbai.