India: Trade level BF-route rebar prices fall by INR 800/t ($10/t) in weak market

Trade-level prices of blast furnace (BF) route rebars dropped on weekly basis amid weak buying interest in the domestic market. Current rebar prices in the trade segment declined by INR 800/t ($10/t) w-o-w to INR 57,200/t ($688/t), exy-Mumbai, as per SteelMint's assessment on 20 October, 2023. Prices exclude GST at 18%.

In the projects segment, prices are currently hovering around INR 55,500-56,500/t ($668-680/t) FOR Mumbai basis. End-users procured on urgent requirement basis amid fall in prices, limited availability of labor during the festive season impacted construction activities.

Factors behind drop in prices

1. Weak domestic demand: Demand for rebars has been need based only since the starting of this month as October being a month of festivals like Durga Puja, Dusshera where demand is generally impacted. "Trade network still has older inventories bought in the month of August and weak market sentiments have weighed on the sales volumes leading to difficulty in liquidation of inventories", highlighted market sources.

2. BF-IF rebar price gap widens: The monthly average gap between BF-IF rebars widened to around INR 6,000-6,500/t ($72-78/t) this month as against INR 4,500-5,000/t ($54-60/t) in September. This has been one of the prime reasons for drop in trade-level rebar prices.

Weekly average prices of Induction Furnace (IF) route rebars dropped by INR 600/t ($7/t) w-o-w to INR 50,700/t ($610/t) exw-Mumbai amid subdued demand and lesser trade activities and fall in prices of billet and sponge iron. Buyers were cautious in procuring material and opted wait-and-watch mode and manufactures continued to offer trade discounts due to selling pressure in the spot market. Current prices are hovering at INR 50,300/t ($605/t) exw-Mumbai as on 20 October 2023.

3. Slow demand from infra and construction: Demand from the infrastructure and construction segment slowed down last month with 371 km addition in the domestic national highway network in September as against 526 kms in the month of August.

During the first six months of FY24 (April-September 2023), the highway construction totaled at 3,567 kms, down 1% as compared with 3,599 kms in the corresponding period last year (CPLY) according to data released by Ministry of Road Transport and Highways (MoRTH). Furthermore, steel demand from this segment is likely to pick up in the second half of FY24 with central government's intent to accelerate road construction as 2024 being the election year.