India: IF route rebar trade prices remain under pressure in Jul'24

India's Induction Furnace (IF) route rebar prices remained under pressure in July 2024. Rebar (Fe 500) prices showed a drop in the range of INR 500-3,300/tonne (t) on m-o-m basis as per data recorded by BigMint. The sharpest fall was seen in the Mumbai market. The IF rebar prices hit three-and-a-half year low in the last week of July. Similar levels were observed in February, 2021.

Remarkably, India's rebar production (IF and BF route both) in first half (H1) is recorded at 23.4 million tonnes (mnt) in calendar year 2024 (CY'24), increased by over 9.2% in comparison to 21.7 mnt in CY'23 during the same period of time as per data released by JPC. However, on m-o-m basis production merely reduced by over 0.25% in June 2024 which is recorded at 4.018 mnt in comparison to May 2024 which is recorded at 4.029 mnt.

Factors behind market dynamics:

• Drop in raw material prices: 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 450-750/t across regions. Raipur market witnessed a decrease of INR 750/t. On the other hand, scrap HMS 80:20 varied by INR 500-1,100/t in various markets. A major dip was witnessed in Chennai and Raipur markets by INR 1,100/t.
  
  
• Lack of demand: Due to ongoing monsoon season, construction activities have been slowed down, leading buyers to refrain from bulk booking and to opt for cautious buying. Moreover, the recent NHAI show-cause notice to IF mills on quality maintenance is having negative impact on rebar offtake.
  
  
• Inventories pressure: In spite of a slight decline in the price of billet and sponge iron, IF rebar manufacturers struggled to reduce their offerings due to a lackluster market. Mills were only able to sell roughly half of their daily output in July causing inventories to pile up in the mills. Additionally, the lifting of the previously booked material was very slow in the market. This inventories pressure forced the manufacturers to reduce their offers and give discounts to liquidate their materials.
  
  
• BF route price trends: BF-rebar trade prices fell by INR 4,000/t m-o-m to monthly average of INR 53,400/t exy-Mumbai in July 2024 owing to subdued domestic demand. Limited inquiries and need-based demand from end-users weighed on the market sentiments.
  
  

Outlook

Looking into the current scenarios of decreased prices and monsoon season, prices of IF route rebar are likely to remain under pressure.