India: Rebar Price Gap Between Large and Medium Mills Drop to 6 Months Low

The monthly average re-bar price gap between large & medium/small scale mills have dropped down to 6 months low to INR 4,000-4,100/MT (USD 57-59). However, price difference on spot basis (price assessed as on 27th Sep) has narrowed down to INR 2,500-3,000/MT.

It is learnt that large mills are selling at discounted prices to liquidate inventories, which is estimated to be higher than the normal. Large producers have reduced their prices by INR 7,500-8,000/MT (USD 105-120) during Apr-Sep'19, whereas mid-scale producers price dropped by INR 6,000-6,500/MT (USD 85-92) in the same period.

Current price for 12-25mm re-bar in spot market are hovering at INR 33,700-34,200/MT (Ex-Mumbai, Large producers) and INR 31,000-31,200/MT (Ex-Mumbai, Medium Producers).

Market participants feel that prices likely to be range bound and any scope of sharp correction is limited. Medium sized mills which produce re-bar through induction route are already making a negative margin and have limited scope to cut prices from these levels. Large players are also operating at thin margins.

The steel industry is facing tough times, not just in India but globally on account of sluggish demand, over supply and tight liquidity conditions.