India: Trade prices of BF-route rebar drop INR 600/t ($7/t) w-o-w on soft demand

Trade-level prices of blast furnace (BF) route rebar continued to show downward trend amid lacklusture demand in the distribution channel. Current rebar trade segment prices declined further by INR 600/t ($7/t) w-o-w to INR 52,900/t ($645/t) exy-Mumbai, as per SteelMint's assessment on 23 June. Prices exclude GST at 18%.

Offers in the project segment were heard this week at around INR 51,500-52,000/t ($628-634/t) FOR Mumbai. Price negotiations and requirement-basis procurement weighed on buying activities, as buyers expect prices to correct further in near term.

Factors weighing on prices:

1. Drop in raw material prices: Prices of key steelmaking raw material, iron ore fines (Fe 63%) dropped w-o-w, while coking coal was largely stable.

SteelMint's weekly Odisha iron ore fines Fe 63% index registered a drop of INR 300/t ($4/t) w-o-w to INR 5,500/t ($67/t) ex-mines as on 17 June against INR 5,800/t ($71/t) in preceding week.

Australian premium hard coking coal (HCC) prices remained range-bound last week amid lower availability of July loading cargoes. Prices edged downward by $1/t w-o-w to $242/t compared with $243/t a week ago.

2. Limited buying interest for IF rebar: IF-route rebar prices edged down by INR 200/t ($2/t) w-o-w to INR 50,800/t ($619/t) exw-Mumbai this week. Buying interest for induction furnace (IF) rebar remained limited as buyers procured on need-basis only amid volatility in billet prices during the period. Buying interest was low at higher offers and negotiations led manufacturers to offer trade discounts. Prices stood at INR 50,700/t ($618/t) exw-Mumbai as on 23 June.

The gap between BF-IF route rebars have been narrowing over the past few months. The monthly average gap stood at INR 2,500-3,000/t ($30-37/t) in June against INR 3,500-4,000/t ($43-49/t) a month ago.

3. Lacklusture demand: Buying interest in the trade channel has remained lacklusture over the past couple of months as prices have been falling for the 20th week in a row. This resulted in distributors entering a destocking mode to maintain their inventories at minimum levels amid volatility in prices. Likewise, buyers are also cautious and have adopted a wait-and-watch approach, engaging only in needs-based purchases.

Outlook

Buyers are currently waiting for price announcement for July dispatches from primary mills. Meanwhile, trade activities are likely to remain slow as monsoons are approaching which generally disrupts supply chain and slows construction activities.

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