Since the start of July 2017, the rebar prices have declined gradually owing to seasonal low demand. Meanwhile, in the same duration billet prices continue to increase owing to good export demand and strengthening sponge prices.
This inversely rotating prices of rebars and billet has adversely affected the conversion from billet to 12mm rebars.
Prior the 1st week of July 2017, the re-rollers based in Central and East India were able to fetch the conversions of around INR 4,000/MT (billet to 12mm rebar), which has declined to INR 3,000-3,200/MT currently.
Further, according to the standalone re-rollers, minimum required conversion is INR 3,500/MT, from billet to 12mm rebars. If the situation persists the manufacturers will be obliged to cut their production.
As per one of the renowned manufacturer in Central India – Raipur, who produced rebars about 0.35 MnT per annum stated “we have reduced the operations and other medium/small mills may also follow the suit as there are minimal trades happening in the domestic market.”
On further conversation he added that, the offers would reel under pressure due to the heavy monsoon prediction in the Central belt.
Market participants also mentioned that, during the monsoon season, the mills reduce the productions to cope up with losses. The same is expected for this year also as manufactures might reduce their production.
Source: SteelMint Research
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