India: IF rebar prices gain momentum amid increased buying activity

India's induction furnace (IF) finished long steel market experienced a sudden price surge over the past 15 days. Rebar (Fe 500) prices rose by INR 1,300-3,900/tonne (t) across various regions after reaching bottom levels over the last 2-3 months. Previously, prices had hit a 3.5-year low in July, last seen in February 2021.

The most significant increase occurred in the Raigarh market, with a rise of INR 3,900/t, followed by Raipur at INR 3,400/t. This surge boosted market sentiment, prompting buyers to make bulk purchases, believing prices had bottomed out. Notably, most of the bookings came from dealers and distributors, along with increased demand from project segments after the monsoon. Additionally, players in western regions have increased the gauge parity in some sizes to improve margins.

Factors behind the price rise:

1. Improved demand: Increased buying interest, particularly from the project segments, compelled sellers to raise their offers as prices had already bottomed out. Additionally, the Government of India has sanctioned the release of the installment of funds for the Pradhan Mantri Awas Yojna (PMAY) for the year 2024-25, driving demand at lower price levels and prompting buyers to actively procure materials.
   
   
2. Active buying in raw materials: A similar trend was observed in sponge iron and billet prices. BigMint's billet index rose by INR 2,500/t during the period, while sponge iron (PDRI) prices increased by INR 2,000/t exw Raipur. Additionally, NMDC's pig iron auction saw higher bids, with the entire quantity sold at INR 34,700/t, up by INR 1,500/t from the previous auction. Furthermore, a shortage of high-grade iron ore fines, caused by production disruptions during the monsoon, led to aggressive bidding in OMC's recent iron ore auction.
   
   
3. BF route price trends: Indian tier-1 mills have increased rebar list prices by INR 500-1,000/t ($6-12/t) for end-September 2024 deliveries, sources informed BigMint. Post-revision, list prices hovered in the range of INR 50,500-52,000/t ($603-609/t) on a landed basis. Following this, trade-level blast furnace (BF) rebar prices rose by INR 500/t ($6/t) to INR 50,500/t ($603/t) w-o-w exy-Mumbai, as per BigMint's assessment on 27 September 2024. Prices are exclusive of GST at 18%. Supply issues from a public sector undertaking (PSU) steelmaker continued to persist in the market, leading participants to quote higher prices amid ongoing shortages in some markets.

   Outlook
   
   

Participants are of the view that prices may remain supported in the near term also as manufacturers have already sold sufficient stock. They are relieved from their inventory pressure. Because inventory levels have decreased from 15-17 days to 7-10 days. Also, post-monsoon construction activities have also resumed which play a vital role in demand of rebars.