India: Primary steel producers cut rebar prices for early-June sales

Indian primary steel producers have reduced BF-route rebar prices for early-June 2022 sales following the recent government's announcement to levy export duty of 15% on bars and rods of iron or non-alloy steel, amid the already sluggish market, SteelMint learnt from sources.

Effective list prices of rebar (12-32mm, IS1786) by different companies:

• JSW Steel: INR 63,500/t ($817/t) on FOR-Mumbai basis.
  
  
• Steel Authority of India (SAIL): INR 63,500-64,000/t ($817-824/t) delivered Mumbai basis.
  
  
• Jindal Steel and Power Ltd (JSPL): INR 63,000/t ($811/t) on delivered Delhi basis.
  
  

All above prices are basic and exclude GST at 18%.

SteelMint's BF-grade rebar trade reference prices stand INR 62,000/t ($798/t) exy-Mumbai and INR 63,500/t ($817/t) exy-Delhi basis, down by up to INR 3,000/t ($39/t) w-o-w.

Why have prices edged lower?

Indian mills withdraw from exports: Post-the government's announcement of export duty on various steel products, Indian mills withdrew their export offers from the overseas markets. For instance, mills have backed off from offering rebars to Hong Kong, SteelMint understands from reliable sources.

In 2021, India's total rebar exports stood at 1.1 mnt (the share of Hong Kong stood at 0.62 mnt), up by a whopping 139% from 0.46 mnt in 2020.

Subdued demand, onset of monsoon: Demand for BF-grade rebars from downstream buyers continued to remain dull in anticipation of a further price drop. During the June-September period, it typically rains in India. Thus, demand for the construction material (rebar) slows down, resulting in increased inventories. For instance, RINL's closing stock in May went up 41% m-o-m or by over 63,000 tonnes (t) to 0.22 mnt compared to 0.15 mnt in April.

Demand shift towards IF-grade rebar: In March, the price spread between induction furnace rebar and blast furnace material stood at around INR 3,000/t ($39/t) levels. However, this was at around INR 8,000/t ($103/t) levels (2.5x) in April and May which resulted in the shift of demand towards IF-grade rebar as the use of secondary steel has been allowed in many government and private projects.