India: BF-route rebar trade prices fall to 5-month low amid sluggish sentiments

Trade level BF-route rebar prices in India declined w-o-w across major markets amid sluggish demand in the trade channel network. Buyers moved to side lines and procured only when needed.

"An anticipation of a further fall in prices has been weighing on market sentiments due to which distributors are keeping their inventories at minimum levels, and remain cautious while placing orders with mills," said a market source.

Current rebar trade segment prices fell by INR 1,000/t ($12/t) w-o-w to INR 56,400/t ($682/t), exy-Mumbai, as per SteelMint's assessment on 19 May. Prices are excluding GST at 18%. Prices are currently at a 5-month low level as the similar levels were last seen on 23 December 2022.

Factors weighing on prices-

1. Steady raw material prices: Prices of key steel making raw materials i.e, iron ore and coking coal, remained range-bound w-o-w.

For instance, SteelMint's weekly Odisha iron ore fines Fe 63% index remained unchanged w-o-w at INR 5,900/t ($71/t) ex-mines as on 13 May.

Australian premium hard coking coal (HCC) prices rose by $10/t w-o-w to a weekly average of $258/t CNF India for the week ending 13 May compared to $248/t last week. Improved demand due to restocking activities from India and Asian countries supported prices.

2. Slow demand for IF-route rebars: Demand for induction furnace (IF)-route rebars slowed down a bit this week compared with the preceding week. The shortage of scrap in the key domestic markets due to custom clearances has resulted in increase in rebar offers by manufacturers. In addition, prices of raw material have also remained volatile in the week.

Trade prices of IF-route rebars remained range bound over the week at INR 54,100/t ($654/t), exw-Mumbai amid limited bookings in the spot market. Prices were assessed at INR 53,800/t ($651/t), exw-Mumbai as on 19 May. IF-route rebars enjoys a domestic market share of around 65-70%, as per SteelMint's assessment.

The price gap between BF-IF route rebars narrowed down further to INR 3,500-4,000/t ($42-48/t) as against INR 4,500-5,000/t ($54-60/t) last month. This comes with a continuous fall in BF-rebar trade prices and a slight rise in IF-rebar prices.

3. Sluggish infra and construction sector: Demand from infrastructure and construction segments was slow in April as it marks the beginning of the fiscal year.

There have been significant additions of 523 km in the domestic national highway network in April, lesser by 55 km from 578 km in the same month of the previous year and 330 km as against 853 km in April 2021, according to data released by the Ministry of Road Transport and Highways.

Outlook

Rebar offers in the project segment were heard around INR 55,000-56,000/t ($665-677/t) FOR Mumbai. Demand from this segment is improving slightly as pre monsoon sourcing is picking up and there has been a rise in prices of IF-route rebars which might keep prices supported.

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