Demand for Indian scrap-based rebar firmed over the weekend as buyers started to restock in anticipation of sharp increases in prices, driven by an escalation of the US-Iran conflict.
The conflict, which started on 28 February, is raising energy costs for steel manufacturers and has stoked concerns about supply disruptions among buyers, market participants told Argus.
The hostilities in the Middle East sent Brent crude futures surging by 13pc today and have also threatened to raise freight and transit costs for commodities.
A long products manufacturer based in Maharashtra state's Jalna market said its input costs have increased by 1,700 rupees/t ($18.50/t) over the past two days, prompting it to raise base prices for rebar to Rs45,500/t ($496/t) from Rs43,700/t two days ago. Overall, prices for 12mm rebar in Jalna, which are about Rs5,000/t higher than base prices, have risen by Rs1,000/t since the conflict began, sources said.
The price hikes revived demand in the secondary steel market, where producers use scrap and direct-reduced iron (DRI) as key feedstocks. Buyers rushed to secure supplies amid geopolitical uncertainty and ahead of any further increases. Until the end of the previous week, demand in the secondary markets had been slow.
This week, billet prices increased to R44,000/t ex-works Mandi-Gobindgarh from last week's lows of Rs42,800/t, a north India-based steel producer said.
Market participants expect further price hikes in the rebar market, particularly if the conflict continues for a prolonged period.
The geopolitical volatility is also expected to restrict supplies of Iran-origin DRI to India's west coast, potentially driving up raw material costs. Indian steel producers on the west coast stepped up the use of DRI in place of scrap to reduce feedstock costs in the middle of 2025. This resulted in an increase in DRI imports from the Middle East.
Major integrated primary steel producers also raised hot-rolled coil (HRC) and rebar prices by Rs1,000-1,500/t at the start of March, market participants said. This increase had been expected, even before the conflict, but one of the reasons cited by mills was a spike in energy costs, a Mumbai-based trading firm said.
Higher offers from mills pushed up retail prices, with suppliers attempting to sell cut-to-length at Rs55,000/t ex-Mumbai. The Argus weekly Indian domestic HRC assessment for 2.5-4mm material was assessed at Rs53,500/t ex-Mumbai, excluding goods and services tax, on 27 February.
Overall activity in the flat and long product markets is also slower than usual this week because of the Holi festival. Once the festival is over, market participants expect dispatches to increase further.
Potential hit to flat steel exports
If the conflict lasts for a prolonged period, input costs will keep rising, while finished steel exports to the Middle East will be restricted, forcing Indian mills to push for more sales in the domestic market, an Indian HRC trader said. This could pile further pressure on HRC prices after the middle of the March, when customers typically scale back purchases as the end of the financial year approaches, the trader said.
An Indian steel service centre said its shipments to the UAE were put on hold by a shipping company today because of maritime safety concerns arising from the conflict. Most shipowners are avoiding transits through the strait of Hormuz, shipping sources told Argus.
India's finished steel exports to UAE rose by 20pc on the year to 424,700t in the first 10 months of the April 2025-March 2026 financial year. Lately, alternative markets like the Middle East have become increasingly important for Indian steel exporters as sales to the EU — India's biggest overseas market — slow down because of trade barriers and carbon policy problems.
Indian steel market participants expect further clarity on the conflict and its effect on the steel market towards the end of the week.
