India: Rebar Price Gap Between Large & Medium Mills Fall Further

Amid recent price hike of medium mills, price gap between large & medium mills' rebar has come down further.

As per SteelMint assessment, rebar price gap between the large & medium/small scale mills is currently assessed at INR 2,500-3,500/MT (USD 35-50), down sharply as against at INR 4,000-4,500/MT (USD 56-64) in Dec'18, considering Delhi/NCR & Mumbai location.

The prime reason behind the decrease in price gap between them as large producers were facing tough price competition as demand was not much supported in retail as well as in projects. As a result, almost all large mills have dropped prices in rebar by way of incentives/discounts by INR 500-1,200/MT so far in Jan'19.

However in the same duration rebar prices of medium & small mills have recovered consecutively after reaching bottom line during end of Dec'19 or beginning of Jan'19 and currently trading at same range as against average of Dec'18.

Currently in Mumbai - large mills are offering rebar at INR 39,500-40,000/MT, while offers through the medium/small scale mills stood at INR 36,300-36,600/MT. The prices are for 12-25 mm size, ex-work & excluding GST at 18%.

Similarly in Delhi - the large mills are offering rebar at around INR 40,000-40,500/MT, although the offers by medium & small scale mills hovering at INR 37,400-37,500/MT for the same size material.

As per the Industry leaders, demand seems to be little better in wire rod/structure compare to rebar in the last couple of months.

What May Happen?

As per the market participants, long product prices seem to be bottom out currently and further scope of downside is very limited. However, large mills are trying hard to increase production which will increase supply and this may lead to price corrections.

Also, Union Government to present interim budget on 1 Feb'19 which will provide the road map for the near future. This is the last budget before the Lok Sabha elections, which is going to be held in the next few months.