Re-bar prices rally that started from Dec, 2013 and touches the high in 2014, now seems to be stabilizing after correction.
Today, Indian Government official released the Steel long production for FY14 that stood at 29.62 MnT compared to 28.45 MnT of last year and registered a growth of 4%.
Major factors of price correction that SteelMint assessed from market participant are:
1) Price touches all time High: Re-bar prices are all time high in 2014 as secondary manufacturer are offering Re-bar in range of INR 37,500-38,500/MT Basix, Ex-Works 12MM (INR 43,000-44,000/MT; inclusive of all taxes), whereas primary manufacturer are offering at the same level of INR 40,000/MT Basic price, Ex Delhi, 12MM (INR 47,000-48,000/MT; inclusive of all taxes). This difference from primary to secondary is squeezed at INR 2,500-3,500/MT from earlier INR 5,000/MT.
2) Demand to remain under Pressure as Election Dates are Closure: Many market participants believe that demand will remain at low end as elections and new government formation will delay private & government projects. Transportation of Re-bar is also been hit by elections.
3) Price to get support after Small Correction: Many traders have purchased stock at high price as price rally remained quite long for 2-month. Therefore, participants believe, this correction will be small as financier will not reduce offer at sudden.
4) Inventory to Increase: Since price show negative sentiment, this will directly hurt the buying and restocking sentiment in rural areas. High production and low demand will increase the inventory that is quite low from sometime.
5) Primary Manufacturer to shift focus in Retail Market: Pursuant to India Government data release, the primary producer produces 10.5 MnT Finish long against the last year production of 9.9 MnT, up by 6% per annum. The major demand of primary producer arise from government and national level project, due to low infrastructure project they have shifted their focus in retail market.
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