Indian tier-1 mills hike rebar list prices by INR 1,000/t ($12/t)

• Lower inventories with mills lead to shortage
  
  
• Iron ore, coking coal prices increase w-o-w
  
  
• IF-rebar offers witness downward trend w-o-w
  
  

India's leading tier-1 mills increased rebar list prices by INR 1,000/tonne (t) ($12/t), sources informed BigMint. Post-revision, list prices hovered in the range of INR 54,000-55,000/t ($642-654/t) on a landed basis. It should be noted that mills also raised prices by up to INR 1,000/t ($12/t) in the previous week.

Following the price hike, trade-level blast furnace (BF) rebar prices increased by INR 900/t ($11/t) w-o-w to INR 54,500/t ($648/t) exy-Mumbai, as per BigMint's assessment on 18 October 2024. Prices are exclusive of GST at 18%. The price hike was triggered by reduced inventories at mills, which caused shortages in certain material sizes within the trade channel. Meanwhile, buying activity remained slow this week.

In the project segment, prices hovered at INR 53,000-54,000/t ($631-642/t) FOR Mumbai.

Factors behind market dynamics

1. Lower inventories with mills: Rebar inventories at primary mills declined by 35-40% over the past two months and are currently hovering at around 250,000-300,000 t in October. This reduction was driven by successive price hikes since late August, improved post-monsoon demand, and maintenance shutdowns during July-August. Additionally, production suspension at a leading PSU steel mill exacerbated shortages, leading sellers to raise prices.

"Major mills are managing pending orders from real estate giants amid the ongoing material shortage," BigMint heard from market sources.

2. Raw material prices rise w-o-w: Prices of key steelmaking raw materials, i.e, iron ore and coking coal, increased on a w-o-w basis. BigMint's weekly Odisha iron ore fines Fe62% index rose by INR 200/t ($2/t) w-o-w to INR 5,000/t ($59/t) ex-mines as on 12 October 2024. Iron ore prices rose ahead of the latest Odisha Mining Corporation (OMC) auction, as miners kept their offers high and buyers anticipated further increases. Overbooking by miners added to the market's bullish outlook.

Australian premium hard coking coal (PHCC) prices rose by $4/t w-o-w at $225/t CNF Paradip.

3. IF-rebar prices drop w-o-w: Induction furnace (IF) rebar prices declined across markets due to slow buying activity and market uncertainty, prompting buyers to purchase material only as per their needs. Despite this, manufacturers maintained their list prices, having sufficient prior bookings. Market sentiment was weighed down by bid-offer disparities, with inventories lasting around 7-10 days. Prices of billets and sponge iron also fluctuated within a narrow range during the week. IF-rebar trade prices were down by INR 500/t ($6/t) w-o-w to INR 48,100/t ($572/t) exw-Mumbai.

The price gap between BF-IF rebars stood at around INR 6,000-6,500/t ($71-77/t) in the Mumbai market. Notably, IF rebars enjoy a 65-70% share of the market.

Outlook

Market participants expect prices to stay steady amid the ongoing shortages ahead of the Diwali week.