Indian rebar prices are continuously surging in line with the spike in demand & increase in raw material prices as well. Similarly the conversion spread have also slightly gain by INR 500-800/MT in Raipur, Central India.
In Mar’17, the conversion from billet to 12 mm rebar in Raipur are between INR 3,500-4,200/MT which was in and around INR 3,000/MT during Jan-Feb’17.
According to the manufacturers based in the region, with the increase in sales of finish long the conversion is also becoming quite good.
One of the medium scale manufacturer stated that they have maintained a conversion of around INR 4,000/MT in order to maintain the profit holdings.
As the conversion is on a positive note this the reason the large number of manufacturers are running their mill full fledged in order to extract the maximum profit and meet the demand and supply chain.
Note: The Conversion spread represents the suppositional cost of production and margins. If the conversion spread is above the industry’s conversion then the price of the product is above the input cost (inclusive of miscellaneous and raw material cost) and the spread is profitable. If the spread is lower than industry average then the products are priced at less than the input cost and are not profitable.
Sources: SteelMint Research
Leave a Reply