Induction furnace (IF)-route rebar prices dropped drastically w-o-w in major locations in the country on account of slow demand amidst less buying interest and piling up of inventories with the suppliers.
Prices slid down by around 6% in central India’s Raipur, followed by 4% in Durgapur, 4% in Jalna and 1% w-o-w in southern India’s Chennai market.
Key factors behind correction in prices :
- Lack of demand and trade activities : Rebar demand in most major locations was low since the last few weeks due to lack of buying interest amidst low trade activities in the spot market.
- High inventory level: Sales pressure is mounting due to inventory pile-up despite the fact that rolling mills are operating at half the capacity. A few hot charging mills have even discontinued their hot rolling due to poor offtake of material.
- Liquidity crunch: Market sources informed that due to the currency crunch in the spot market post-Diwali, trading activities have been largely hampered, because of which slow dispatches and lifting were being witnessed at the plants’ end.
- Raw material costing: Prices of raw material like sponge iron and billets have dropped to levels almost similar to the price corrections seen in rebar in major locations.
- Sluggish global trends: With the constant drop in metallics prices globally, sentiments in the Indian market turned sluggish. This, in turn, led to poor inquiries for fresh bookings. Currently, Imported scrap offers to India are trending at one-and-a-half year’s low as similar levels had been recorded in February 2021.
Outlook
Indian rebar prices may remain under pressure due to weak trade activities, rising stock with mills and drastic correction in semi-finished product prices. However, prices could find support if trade activities in the spot markets improve, but that will be more dependent on lifting of old bookings, sources informed SteelMint.
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