India: IF rebar trade prices remain under pressure amid slow trade in Oct'24

India's induction furnace (IF) route rebar prices remained under pressure in October 2024. Rebar (Fe 500) prices showed a drop in the range of INR 1,200-4,000/tonne (t) m-o-m, as per data recorded by BigMint.

Buying interest stayed low amid uncertainty in market trends. Prices initially rose at the start of the month due to post-monsoon demand, but later, buyers became inactive, having already stocked up on materials, and festival season further softened demand. Although sellers offered attractive discounts to clear stock, buyers remained cautious and preferred a wait-and-watch approach. Liquidity challenges in the market also limited trading activity. Suppliers in some regions reported increased inventory pressure, with stock levels higher than the usual 8-10 day average.

Notably, India's rebar production (including both IF and BF routes) reached 34.9 million tonnes (mnt) from January to September 2024, marking a growth of over 7.7% compared to 32.4 mnt during the same period in 2023, according to JPC data. On a month-on-month basis, production rose by 1.8% in September 2024, totaling 3.7 mnt compared to 3.6 mnt in August 2024.

Factors propelling market

Raw material prices weaken: Major input feed material sponge (PDRI) as well as steel billet prices further led to a drop in the finished steel prices. The prices of PDRI sponge fell by INR 900-2,300/t m-o-m across regions. The Jharsuguda market witnessed highest decrease of INR 2,300/t. On the other hand, scrap HMS 80:20 varied by INR 400-2,800/t m-o-m in various markets. A major dip was witnessed in Mandi and Hyderabad markets of INR 2,800/t.

Slow demand due to festivals: In October, the festive season around Dusshera and Diwali led to a slowdown in demand from both project and retail segments. Buyers were hesitant to place bulk orders due to market uncertainties, resulting in limited bookings. Transportation and labor issues further delayed the dispatch and lifting of previously booked materials. Despite sellers offering attractive discounts to clear stock, buyers remained cautious and largely adopted a wait-and-watch approach.

BF-route price trends: Trade level BF-rebar prices increased by INR 3,325/t m-o-m to average of INR 53,750/t exy-Mumbai in October 2024, driven by price hikes from mills. Additionally, material shortages within the trade channel contributed to sustained price support, despite of slow demand. In the projects segment, prices rose by INR 3,500/t m-o-m to monthly average price of INR 52,900/t in October 2024. The projects segment witnessed uptick in demand, with mills reporting a backlog of pending orders from buyers.

Outlook

IF route rebar prices are likely to stay supported at current levels, contingent on raw material price trends. Market participants anticipate a boost in trade activity after the Diwali festival, with demand expected to rise from both projects and retailers.