Indian tier 1 mills have announced hike of up to INR 1,500/t ($18/t) in rebar list prices earlier this week, and trade prices of blast furnace (BF)-route rebars are currently rallying at 6-month high as similar levels were last seen during June 2022. Post-revision, mill-wise effective prices:
- Jindal Steel and Power Limited (JSPL):
Rebar (12-32mm, IS1786): INR 63,300/t ($778/t), ex-Delhi
Wire rod (5.5-6mm, SAE1008): INR 59,500/t ($731/t), ex-Delhi - JSW Steel: INR 60,750-61,000/t ($747-750/t), ex-Mumbai
- Steel Authority of India Limited (SAIL): INR 59,500-60,000/t ($732-738/t), ex-Mumbai
- ESL Steel:
Rebar (12-32mm, IS 1786): INR 62,000/t ($762/t), ex-Delhi
Wire rod (5.5-6mm, SAE1008): INR 60,250/t ($741/t), ex-Delhi - Prices are excluding GST at 18%.
Factors behind hike in offers by mills:
1. Increase in raw material prices: Prices of key steel making raw materials like iron ore and coking coal have been on rise since mid-November 2022 and have continued to show an uptrend this year too. This was one of the prime reasons for increase in rebar offers by primary mills.
SteelMint’s weekly Odisha iron ore fines Fe 63% index rose by INR 450/t ($6/t) to INR 5,200/t ($64/t) ex-mines as on 14 January 2023, as compared with INR 4,750/t ($58/t) as on 31 December 2022, as per SteelMint’s records.
Similarly, Australian-origin premium HCC coking coal prices stood at $321/t CNF India on a weekly average basis for the week ended 14 January. Prices increased by $19/t against weekly average of $302/t CNF India seen in the last week of 2022.
2. Lower inventories: Demand from projects segment was strong during third quarter of financial year 2023 (Q3FY23) and it is highly likely to stay healthy in this quarter too. “Mills are having limited inventories at their yards on the back of robust order bookings from projects segment”, reliable sources informed SteelMint. Furthermore, this has created a mismatch between supply and demand, leading to a shortage of inventories in the distribution channel network and has lent some support to levels of prices.
3. IF-route rebar prices stay supported: Trade prices of rebars made through Induction furnace (IF)-route rose by INR 1,300/t ($16/t) to weekly average of INR 57,500/t ($707/t), exw-Mumbai against INR 56,200/t ($691/t) in the previous week due to good bookings. It is to be noted that IF-route rebars enjoy 65-70% of the market share in India.
The gap between BF-IF rebar trade prices has continued to narrow down as the monthly average gap between BF-IF route rebars stands at around INR 2,800/t ($34/t) in January against INR 3,100/t ($38/t) in December 2022. It shall be noted that the same was around INR 3,300/t ($41/t) in November. This reducing gap shall shift the preference of end-users to BF-route rebars over the IF-route ones.
4. Improved global sentiments: Steelmakers across the globe have announced hike in rebar offers this month. For instance, mills in Nepal have raised their rebar offers by NPR 2,500/t ($19/t) to NPR 94,000-95,000/t ($722-730/t) exw, excluding VAT. Production cuts by mills amid power cuts and concerns related to an inflow of costlier imports have led to hike in offers.
Chinese steelmaker, Shagang Steel has also lifted rebar (16-25mm, HRB400) prices by RMB 50/t ($7/t) to RMB 4,200/t ($622/t), ex-mill, including VAT for mid-January sales amid improved sentiments in the domestic market.
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