India: Rebar Conversion Spread Records All Time High

Conversion spread from billet to rebar for Raipur based medium & small scale mills have hit record high, as per the data maintained by SteelMint since Jan'14.

The prevailing conversion spread in Raipur from Billet (100*100 mm) to Rebar (12 mm) is hovering at INR 6,000-6,500/MT, which was registered at around INR 4,000/MT during Jan'20-Mar'20.

The possibilities of higher margins was not expected by the steel industry market participants, with imposition of lockdown. But ignoring all the prospective directions and dull domestic market fundamental, the producers are now not in worry mode as demand remains active along with healthy margins.

Another important facts cited by manufacturers are mentioned below -

-- Sudden announcement of lockdown halted supplies in each and every market where re-roller usually has considerable future bookings and that is supposed to be fulfilled with a number of backlogs for their trade associates. This has mounted supply pressure among producers.

-- Disruption in supply chain where loading and bundling seems very tough which takes considerable time to complete due to manual job. Also limited availability of transportation increased freight charges by up to INR 500/MT, specifically from central to west, south & northern regions.

-- Uncertain market direction and less dispatches due to shortage of labours led to surge in prices as trade associates have to procure amid limited stock in hand and permitted construction activities also supported Rebar prices.