Rebar manufactured through blast furnace route has gone up significantly as most of the mills have increased production levels with an assumption that this would result in better net sales realization (NSR). However, excess production has led to the prices sliding down as the delicate balance between demand and supply too has disrupted.
JSW Steel’s production figures have increased by around 9% on a monthly basis and around 6% on yearly basis. Vizag Steel’s crude steel production has seen a steady increase and reached a high of 5.28 lakh tonnes in Jan’21. Indian large mills are aggressively selling their material which is ultimately merging with previous stocks of the trade associates.
SteelMint has observed that the increase in inventory levels has made the trade associates compromise with the trade margins as they are willing to sell below their costing on assumption of further downward correction.
General rebar price gap was of INR 4,000-5,000/t between IF and BF grade i:e; (IF grade 500 fe, 550 fe and BF grade 500 D, 550 D). However, from last few months the gap has widened and is currently hovering around INR 7,000-9,000/t across regions.
Market participants anticipate the gap might further contract because of the Steel Ministry notification which clarified that rebar can be supplied through various government projects by maintaining BIS specifications and will be tested by National Accreditation Board for Testing and Calibration Laboratories (NABL) before approval.
Further, project and retail segment prices vary by around INR 1,500-2,500/t region wise and depending upon quantities and payment term, currently retail segment is higher by around INR 2,000-2,500/t for specific regions shared by reliable sources.
BF grade retail segment trade prices have drifted down by around INR 2,000-3,500/t on a weekly basis and INR 5,000-7,000/t on a monthly basis. Current rebar (12-32 mm) trade reference price is assessed at INR 49,000-50,000/t (550 D), FoR Mumbai and excludes GST at 18%.
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