India: Trade-level blast furnace-rebar prices remain range-bound in Feb'24

Trade-level prices of blast furnace (BF) rebars remained range-bound in February 2024 amid weak buying activities and participants in the distribution channel destocked inventories amid liquidity issues and market uncertainty. This week's rebar prices (12-32mm, Fe500D) in the trade segment remained stable w-o-w at INR 51,600/t ($623/t) exy-Mumbai. Prices are exclusive of GST at 18%.

Project segment buyers also procured on urgent basis for projects approaching completion, as there has been a decrease in offtake of projects ahead of elections this year. Prices in this segment dropped INR 500/t ($6/t) m-o-m to INR 49,500-50,000/t ($597-603/t) FOR Mumbai as of end-February.

Factors supporting prices:

1. Production cuts by mills: With inventories rising to more than 6,00,000 t in January, mills opted for production cuts which reduced 80,000-1,00,000 t of inventories in February. This resulted in a drop of 10% in inventories to 5,50,000 t in February, sources informed. This helped restore the supply-demand mismatch to some extent and supported price levels. Meanwhile, project prices have already bottomed out.

2. Moderate buying in IF-rebar segment: The Induction furnace (IF) rebar segment observed decent demand in February. Mills reduced their trade discounts and refrained to lower prices as demand picked up and traders procured good volumes. IF rebar trade prices remained supported and rose by INR 300/t ($4/t) w-o-w to INR 48,750/t ($588/t) exw-Mumbai. Inventory period of IF-mills reduced to 7 days from usual of 10-15 days on the back of production cuts in some regions and improved trade activities. It must be noted that IF-rebars command 65-70% share of the rebar market.

The gap between BF-IF rebars stood at INR 3,500-4,000/t ($42-48/t) in February as compared with INR 3,000-3,500/t ($36-42/t) in the previous month.

3. Raw material prices: Prices of key steel-making raw materials, iron ore fines, remained unchanged while coking coal prices dropped in month of February. BigMint's weekly Odisha iron ore fines Fe62% index remained stable m-o-m at INR 5,675/t ($68/t) ex-mines. Last week, iron ore prices dropped after auction results were declared by OMC as few buyers booked material at lower prices against last month.

On the other hand, Australian premium hard coking coal (PHCC) prices dropped by $15/t m-o-m to $332/t CNF Paradip in February as compared with $347/t CNF in the preceding month.

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