As per SteelMint’s analysis, during Feb’19 monthly conversion spread of secondary Re-bar (TMT) makers in West region (Mumbai) hit 28-months low. Meanwhile in other major producing markets it being fall sharply and hit near to 13 months low in Raipur & in Chennai.
The fall in conversion spread attributes to rising capacities, improper demand of finished steel & high cost raw materials due to currency fluctuation as it’s being driven more than 2% volatility in past 30 days and the highest was at INR 71.43 and the bottom line records at INR 69.99 against USD.
Recent released data by JPC being showed, fall in India’s finished steel consumption by 2% M-o-M and stood at 8.486 MnT in Feb’19 as against 8.58 MnT in Jan’19.
During Feb’19, conversion from Billet (100*100 mm) to 12 mm Rebar was recorded at around INR 2,900/MT ex-Raipur, INR 3,100/MT ex-Mumbai and INR 4,100/MT In Chennai. As per industry experts, for standalone mills these conversions are not sufficient enough to run their mills in long-run.
It should be noted that, to increase conversion (margins), the rebar manufacturers have raised gauge parity in Mar’19 by INR 300/MT in Raipur & Mumbai.
Further in Eastern region – Durgapur, conversion was hovering at low levels since in Oct’18 and slightly down by 1% M-o-M and registered at INR 4,623/MT against INR 4,692/MT in Jan’19.
| Monthly Average Conversion Spread Billet to Rebar | ||||
| Month | Durgapur | Mumbai | Chennai | Raipur |
| Jan’19 | 4,700 | 3,250 | 4,180 | 3,450 |
| Feb’19 | 4,600 | 3,100 | 4,100 | 2,900 |
| Change M-o-M% | -2% | -5% | -2% | -16% |
Prices in INR/MT, Source: SteelMint Research
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