India: Primary mills hike rebar prices by for mid-July sales

Primary mills have raised their rebar prices by INR 500-1,000/t for mid-July dispatches. SteelMint had reported last week that tier 1 mills were preparing to raise rebar prices from this week, which had galvanized project segment buyers into procuring in one large quantities!

A large project segment buyer confided to SteelMint: "We already booked last Friday (8 July) based on feedback from primary mill that they would increase prices from Monday."

One leading mill has raised its list prices of rebar and wire rods by INR 1,000/t ($13/t) from today. Its rebar (12-32mm, IS1786) rates, post-hike, are at INR 59,000-59,500/t ($743-749/t), and wire rods (5.5-6mm, SAE1008) at INR 61,000/t ($768/t). Prices are on delivered Delhi basis, excluding GST at 18%.

Another leading longs player has increased its prices by INR 500/t for this month. Post-hike, its 16mm and above rebar is ruling at INR 60,400/t, 8mm are now at INR 62,100/t, 10mm at INR 61,100/t, 12mm at INR 60,600/t and wire rods, at INR 59,050/t exy-Chennai.

Certain factors have allowed the primary mills to raise their offers.

These are as follows:

Firm secondary prices influence primary mills: Secondary sector rebar prices, which comprise 60-65% of the long steels market, have remained firm due to stiff raw material prices. The high iron ore and pellet and thermal coal prices have forced many of them to opt for production cuts. That apart, the high thermal coal prices have raised power tariffs, which is an additional burden, for these power-intensive electric arc and induction furnace mills and have further lent reason to the production curtailments. Because of the above factors, there is short supply, keeping IF-route rebar prices supported and this has influenced the pricing strategy of the tier 1 mills.

Drop in steel production: Secondly, the primary mills have opted for maintenance shutdowns in July, which will decrease crude and finished steel supply and restore the balance vis-a-vis demand and allow mills to sustain the hiked prices.

Supply crunch in iron ore, pellets: Not only are prices of raw materials up, there is a supply crunch too. Especially in iron ore and pellets, which will allow IF-route rebar to stay firm and support primary mills' prices.

That apart, there is an overall improvement in demand, it seems, which will allow the price hike to get absorbed. As said a mill source: "There is improvement in domestic demand and order books are looking healthy."

Outlook

Prices may stay supported in the near term because distributor-level inventory has been depleted thanks to the pre-monsoon buying. Thus, demand will keep prices firm.