Indian Tier-1 mills have increased rebar list prices by up to INR 1,000/t ($12/t) m-o-m for early-February 2024 deliveries, sources informed BigMint. Current list prices are hovering around INR 52,000-52,500/t ($627-633/t) on landed basis. It can be recalled that price tags were increased by INR 500-1,000/t ($6-12/t) during last week of January, which did not reciprocate at the trade-level but prevented trade prices from falling further. Meanwhile, demand in the traders’ market remained slow amid need basis buying.
Current week’s rebar prices (12-32mm, Fe500D) in the trade segment rose by INR 400/t ($5/t) w-o-w to INR 52,100/t ($628/t) exy-Mumbai. Prices are exclusive of GST at 18%.
Factors behind market dynamics:
1. Inventories rise m-o-m: Trade-level prices of blast furnace (BF) rebars declined by INR 2,000/t ($24/t) m-o-m to monthly average price of INR 51,800/t ($624/t) exy-Mumbai in January 2024 amid need-based procurements from buyers, which led to piling of inventories at yards of mills. Rebar inventories rose 8% m-o-m crossing 6 lakh tonnes mark in January.
In the projects segment, prices are presently in the range of INR 50,000-50,500/t ($602-608/t) FOR Mumbai basis. There is no bulk purchase in the projects segment and buyers have shifted to need basis buying, highlighted a mill-based source.
2. Dull demand weighs on IF rebar prices: Induction Furnace (IF) rebars too faced need basis buying amid dull demand and despite of marginal fall in billet and sponge iron prices, IF rebar makers struggled to lower their offers. Inventories in this segment registered 25-30% on m-o-m in January and mills could only sell about 50% of their daily production due to an ongoing liquidity crunch in the market. Current IF-rebar prices stood at INR 48,100/t ($580/t), exw-Mumbai.
The monthly average price gap between BF-IF rebars stood at INR 3,000-3,500/t ($36-42/t) in January 2024 in the key market of Mumbai. On monthly basis, trade prices of IF-rebars dropped slightly by INR 100/t ($1/t) to INR 48,700/t ($587/t) exw-Mumbai, while BF-rebars fell sharply by INR 2,000/t ($24/t) to INR 51,800/t ($624/t) exy-Mumbai in January.
3. Property registrations down m-o-m: Property registrations in the country’s largest real estate market, Mumbai registered a drop of 13% m-o-m to 10,900 units in January 2024 as compared with 12,487 units in previous month, as per data released by Knight Frank India. Meanwhile, the same registered 21% growth on y-o-y basis as against 9,001 units in January 2023.
Outlook
Mills are mulling to curb production with reduction of around 1 lakh tonne this month due to sluggish demand and higher inventories. Furthermore, this may keep prices range-bound in the near term.