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India: State-owned steelmakers hike rebar prices by INR 500/t ($6/t)

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BigMint Bureau

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15 Mar 2024, 14:56 IST

India: State-owned steelmakers hike rebar prices by INR 500/t ($6/t)

Inventories at three-month low

IF-rebar trades pick momentum

Indian state-owned steelmakers have announced interim price hike of INR 500/t ($6/t) in rebar list prices, sources informed BigMint. It can be recalled that mills rolled over prices for early-March 2024 deliveries. Decline in rebar inventories due to production cuts, improved buying activities and rise in IF-rebar prices have supported the market sentiments.

This week's rebar prices (12-32mm, Fe500D) in the trade segment inched up w-o-w by INR 100/t ($1/t) to INR 52,000/t ($628/t) exy-Mumbai. Prices are exclusive of GST at 18%. In the projects segment, prices were hovering around INR 50,000-50,500/t ($603-610/t) landed Mumbai basis.

Factors behind price hike:

1. Inventories fall to three-month low: Rebar inventories with tier-1 mills have touched three-month low of around 5,00,000 t in early-March amid the production cut taken in February to reduce the inventory pressure amid lacklustre demand and restore the supply-demand balance. Furthermore, mills are likely to reduce some production this month, sources informed. Tier-1 mills enjoy 30-35% market share in the rebar market.

2. IF rebar trades improve: Demand for induction furnace (IF) rebars picked momentum during end-February and continued in March due to buying from project segment buyers for closure of projects. This led to depletion of inventories and reduced the inventory days to around 7-10 days in March from usual of 10-15 days. Also, there has been some relief from the liquidity issues which improved trade activities. Current IF-rebar trade prices were assessed at INR 49,500/t ($598/t), exw-Mumbai. It must be noted that IF-based mills command 65-70% share in rebar market.

The gap between BF-IF rebars narrowed to around INR 2,500/t ($30/t) in March as compared with INR 3,500-4,000/t ($42-48/t) in the previous month.

3. Infra and construction project orders: The infra and construction companies have bagged the following project orders:

Larsen & Toubro's Building & Factories (B&F) vertical secured an order from All India Institute of Medical Sciences (AIIMS) Madurai under the PMSSY division, Ministry of Health and Family Welfare. The scope of work includes construction of a hospital and expected to be executed in 33 months.

Larsen & Toubro's Hydrocarbon vertical has secured a major offshore gas pipeline project from a prestigious client in Middle East. The scope includes engineering, procurement, and construction of two new 56" pipelines along with associated scraper receivers and launchers and main line isolation valve (MLIV) stations running parallel to the existing pipeline corridor.

Kalpataru Projects International Limited (KPIL) and its subsidiaries have secured new orders worth INR 2,445 crores. Orders in Transmission & Distribution (T&D) business of INR 2,366 crores in India and overseas markets and orders in Building & Factories (B&F) business of INR 79 crores.