Indian tier-1 mills cut rebar prices by up to INR 1,500/t ($18/t) for early-July 2024

Indian tier-1 mills have announced rebar list prices for early-July 2024 dispatches. Current prices are hovering at INR 55,000/t ($659/t) exy-Mumbai, down by INR 1,000-1,500/t ($12-18/t) as against INR 56,000-56,500/t ($671-677/t) seen in end-June, sources informed BigMint.

Trade-level blast furnace (BF) rebar prices dropped by INR 1,100/t ($13/t) w-o-w to INR 55,200/t ($661/t) exy-Mumbai as per BigMint's assessment on 5 July 2024. Prices are exclusive of GST at 18%. Demand in the trade segment remained lacklustre last month impacted by elections and monsoon in some of the regions, weighing down the market sentiments.

In the projects segment, prices were hovering around INR 53,500-54,000/t ($641-647/t) FOR Mumbai. Inquiries from end-users were very limited amid falling prices which negatively impacted the market sentiments.

Factors behind drop in prices:

1. IF-rebar prices continue to fall: Induction furnace (IF) rebar trade prices continued to show a downtrend this week amid sluggish demand. Last week prices bottomed out to nearly 4-month low as similar levels were previously seen in early-March this year. Buyers moved to sidelines adopting wait-and-watch mode and no major trade activities were observed this week. Inventories remained high with idling days around 12-15 days. IF-rebar trade prices dropped by INR 800/t ($10/t) w-o-w to INR 48,100/t ($576/t) exw-Mumbai as on 5 July.

The gap between BF-IF rebars widened to around INR 6,500-7,000/t ($78-84/t) in June as compared to INR 5,000-5,500/t ($60-66/t) in May. On monthly basis, IF-rebar prices dropped by INR 2,400/t ($29/t) to monthly average of INR 50,500/t ($605/t) exw-Mumbai in June, while that of BF-rebar prices fell by INR 900/t ($11/t) on the month to INR 57,400/t ($687/t) exy-Mumbai.

2. Property registrations drop m-o-m in June: Property registrations in the country's largest real estate market, Mumbai registered a drop of 3% m-o-m to 11,600 units in June 2024 against 12,000 units in previous month as per data released by Knight Frank India.

Meanwhile on y-o-y basis, property registrations rose 12% against 10,319 units in June 2023.

Outlook

Since the price gap between BF/IF rebars has widened, tier-1 mills may revise their prices in coming days. Furthermore, there are planned maintenance shutdowns by primary mills in the second half of this month, which might support BF-rebar prices.

Due to the recent NHAI show-cause to IF mills on quality issues, the inclination of big contractors will now shift to the primary mills, where quality is assured, though at a higher price. Thus, going forward, a substantial market share enjoyed by the IF mills may now shift towards the BF mills.