India: BF-route rebar trade prices fall w-o-w; market awaits mills' July price announcement

Trade-level prices of blast furnace (BF) route rebars declined w-o-w across major domestic markets amid slow buying interest in the trade channel. Current rebar trade segment prices declined further by INR 600/t ($600/t) w-o-w to INR 52,300/t ($637/t) exy-Mumbai, as per SteelMint's assessment on 30 June. Prices exclude GST at 18%.

Factors behind decline in prices:

1. Raw material prices drop: Prices of key steelmaking raw material, iron ore fines (Fe 62%), registered a drop of INR 150/t ($2/t) m-o-m to INR 5,350/t ($65/t) in June as against INR 5,500/t ($67/t) a month ago.

SteelMint's weekly Odisha iron ore fines Fe 62% index remained stable w-o-w at INR 5,200/t ($63/t) ex-mines as on 24 June.

Australian premium hard coking coal (HCC) prices inched down by $2/t m-o-m at $244/t CNF Paradip this month as compared with $246/t a month ago.

2. BF-IF rebar price spread narrows: The monthly average price spread between BF-IF route rebars narrowed by INR 1,000/t ($12/t) m-o-m to INR 2,500-3,000/t ($30-37/t) in June as against INR 3,500-4,000/t ($43-49/t) in the previous month. This comes amid sharp fall in BF-route rebar prices, which have been on downfall since past 21 weeks due to slow buying interest.

Likewise, IF-route rebar trade prices also fell sharply by INR 1,400/t ($17/t) w-o-w to INR 49,300/t ($601/t) exw-Mumbai from INR 50,700/t ($618/t) seen a week ago. Buying activities slowed down this week getting impacted by monsoon, which made manufacturers to lower their offers and give trade discounts. Prices were assessed at INR 48,600/t ($592/t), exw-Mumbai as on 30 June.

3. Rebar offers in projects segment drop: This week offers in the project segment were heard around INR 50,000-51,000/t ($609-621/t) FOR Mumbai. Need-based procurement from end users has been weighing on the offers during the month.

4. Monsoon to impact market activity: India's rebar production increased by 24% on the month to 3.87 million tonnes (mnt) in May 2023 against 3.12 mnt in the previous month, as per data released by Joint Plant Committee (JPC). Similarly, y-o-y, output was up by 19% from 3.26 mnt in May 2022. This resulted in inventory pile up at yards of mills over the past months. Meanwhile, major primary mills have planned maintenance shutdowns next month and also monsoon have approached which generally slows down construction activities and impact logistics network. Thus, this is likely to keep market activities slow next month.

Market participants are waiting for mills' price announcement for July deliveries, which is likely to come up next week.

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