Indian primary mills have kept their monthly contract prices for project segment unchanged for November sales, SteelMint learnt from reliable sources.
Post-revision, offers stand at INR 56,500/t ($699/t) FOR Mumbai basis. However, a few sources indicated that the market has softened against the last month. Apart from a drop in IF rebar prices, demand crisis in the global longs market has also negatively impacted sentiments in India.
Prices unchanged
1. Falling IF-route rebar trade prices: The IF route rebar prices have registered a sharp decline because of lesser buying enquiries resulting in piling up of inventories with the mills. SteelMint’s IF-route rebar (12-25mm, Fe 500, IS 1786) prices stood at INR 53,500/t ($662/t) exw-Mumbai as on 11 November in contrast with INR 56,000/t ($693/t) levels seen in mid-October. It is to be noted that induction furnace (IF) route rebar enjoys 60-70% of the market share.
As a result of which, the gap between BF-IF route rebars has further widened to INR 2,500-3,000/t ($31-37/t) as on 11 November.
2.Moderate housing demand in October: Demand from the housing sector remained moderate last month. Registration of properties in the Mumbai municipal region, India’s biggest housing market, stood at 8,276 units in October, down 3% from the year-ago period, as sales momentum moderated despite festive demand.
In addition to the above, the measures adopted by the Commission for Air Quality Management (CAQM) to ban the construction and demolition activities in northern Indian provinces to prevent further deterioration of the air quality index (AQI) are in effect. This has affected ongoing housing projects in cities such as Noida, Ghaziabad and Gurugram etc.
3.Higher stamp duty and interest rates: The restoration of stamp duty to 5% against 2% during the pandemic period has been weighing on the purchasing power of buyers. Property registrations in most of the Indian cities during the July-September period was down 10% against same period last year and the number of unsold houses reached 3.4 lakh in Mumbai by end-September due to higher input costs and price increase by property developers on the back of rising sales during post-pandemic revival.
In addition, hike in repo rates by Reserve Bank of India (RBI) to tame inflation have made interest rates on home loans costlier by 8-9%.
Will prices remain supported?
The delayed exit of monsoons and shortage of labour amid festive holidays have also impacted construction activities in October. Demand for construction steel is expected to improve with labourers coming back and easing restrictions on ban of construction activities in the north India.
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