Indian primary mills have increased list prices of rebars by up to INR 1,000/t ($12/t) for end-January 2023 sales, sources informed SteelMint. This is the fourth consecutive price hike in the month. Subsequent to revision, effective prices are-
- JSW Steel: INR 62,750-63,000/t ($770-773/t), ex-Mumbai
- Jindal Steel & Power Limited (JSPL):
Rebar (12-32mm, IS1786): INR 64,300/t ($789/t), ex-Delhi
Wire rod (5.5-6mm, SAE1008): INR 60,500/t ($742/t), ex-Delhi - ESL Steel: INR 64,000/t ($785/t), ex-Delhi
- Prices are excluding GST at 18%.
Following this, trade level prices of rebars made through blast furnace (BF)-route rose by INR 1,100/t ($13/t) w-o-w to INR 62,000/t ($761/t), exy-Mumbai, excluding GST at 18%.
Factors behind the price hike-
1. Increase in raw material prices: The increase in prices of key steel making raw materials such as iron ore and coking coal was one of the prime reasons for the hike in rebars offers by the primary steelmakers.
SteelMint’s weekly Odisha iron ore fines Fe 63% index rose by INR 300/t ($4/t) to INR 5,500/t ($67/t) ex-mines as on 21 January 2023, as compared with INR 5,200/t ($64/t) as on 14 January 2023. On a m-o-m basis, prices have registered a rise of INR 610/t ($7/t) to the monthly average of INR 5,270/t ($65/t) in January 2023 against INR 4,660/t ($57/t) a month ago.
Furthermore, the largest merchant iron ore mining company, NMDC, has announced a hike in iron ore prices by up to INR 500/t ($6/t), with effect from 28 January 2023. The company has raised prices of lump ores by INR 300/t ($4/t) and fines by INR 500/t ($6/t).
Similarly, the weekly average price of Australian-origin premium hard coking coal (HCC) stood at $330/t CNF India on 21 January 2023. Prices have increased by $9/t against the weekly average of $321/t CNF India a week ago. The same rose sharply by around $49/t m-o-m to $326/t CNF India in January 2023 against $277/t CNF India seen in December 2022.
2. IF-route rebar prices on rise: Trade prices of Induction furnace route (IF) rebars have increased by around INR 1,600/t ($20/t) w-o-w to INR 58,600/t ($719/t) exw-Mumbai as on 27 January 2023 against INR 57,000/t ($699/t) on 21 January 2023. Prices have been on rise due to good order bookings, which is further giving support to BF-route rebar trade prices.
3. Lower inventories: Mills are currently having limited inventories at their yards due to healthy order bookings from the infrastructure and construction segments, which comprises of around 60% of overall steel demand, SteelMint notes. As a result, allocations to the distribution channel are very limited, leading to a supply-demand imbalance.
4. Strong demand from projects: The contract rebar prices for the projects segment are currently hovering around INR 62,000-62,500/t ($761-767/t) FOR Mumbai. Demand from the projects segment is likely to remain strong during this quarter. As it is the last quarter, deadlines for project completions are nearing ahead of the ongoing financial year closure.
The upcoming budget will give a big push to around 197 critical infrastructure gap projects which have been identified under the PM Gati Shakti National Master Plan. This would give additional allocations and funding support to the states.
Furthermore, primary mills are likely to raise their monthly contract prices for rebars for February sales on the back of healthy demand.
Outlook
Mills are likely to announce a hike in rebar prices for February sales in the coming days as iron ore and coking coal prices are likely to remain supported next month.
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