Rebars production through the IF (mid-size re-rollers) was adversely affected mainly due to labour concerns in most of the major locations of Central, West, North & Southern India. Thus, this has also put pressure on prices of sponge iron & billet, across regions.
SteelMint in conversation with re-rollers learned that the Western region registered a major drop in production by 50-70% due to oxygen shortage. The drop was to the tune of 30% in Central, North & Southern regions.
The demand for rebars was also adversely affected due to the lockdown in the major tier one cities. This has also resulted in price corrections.
Since, the billet prices are falling rigorously compared to the rebars, the conversion spread (margins) remained strong and currently are hovering at INR 4,500-5,000/t in Raipur, Durgapur, Hyderabad & around INR 6,500/t in Ahmedabad & Mumbai from billet (100,125mm) to rebar (12-25) mm.
Market participants believe further price change of rebars will be more dependent on billet price movement, however falling production seems to be positive for rebar manufacturers in terms of conversion as the average required is around INR 4,000/t, which is currently up to INR 7,000/t in various locations.
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