Indian large mills, who are making steel through the blast furnace route are expected to reduce Finished long steel prices for Dec’18 deliveries.
As per participants, Finished long steel (rebar) demand was not up to the mark with the large scale mills on prevailing offers during Nov’18. The mills may also come under pressure in line with falling steel prices globally and down trend in raw materials.
Below are the key factors which indicates price reductions in coming month
Falling exports: Inquiries from the overseas buyers are minimal following slump in global steel prices which has raised price competitiveness, resulting dull demand for exports.
As per vessel line up data maintained with SteelMint, India exported about 77,300 MT billet & about 7,000 MT Rebar during Nov’18 which are expected to be just in half figures during Dec’18 as no major deals reported owing to slump in global steel prices and stronger rupee against US dollar.
Widening price gap on slump in secondary steel prices: In the current month the rebar prices in secondary market (through the mid/small size mills) have reduced by INR 2,000-3,000/MT (USD 28-42), while in the same duration the prices through the large mills have rolled over, however discounts raised through the distributors/traders end.
On an average, rebars price gap between the large & medium/small mills is close to INR 4,000/MT, which has now widened to INR 6,000-7,000/MT in major consuming markets i.e. Mumbai & Delhi/NCR.
Slump in Raw material prices: Iron ore & coal are the the key fuels for making steel in blast furnaces, the prices of these materials has fallen sharply in ongoing month. Odisha based major merchant miners have reduced prices in last one week.
Earlier due to rising prices of raw materials the large producers have significantly raised rebar prices at close to INR 3,000-3,500/MT (during Sep to Nov’18). However it seems that the producers now go for price corrections owing to recent fall in Iron ore by INR 600-700/MT, also the coal prices dipping owing to poor demand from Chinese mills.
Lessened Demand: Amid slump in secondary steel prices, the demand with large mills also observed weak, this has increased inventories as target was not met owing to limited domestic & export sales.
Market expects productions are rising significantly of large mills, the producers have to raise their sales which is in down trend currently. This may influence producers to cut prices to increase trade volumes.
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