Indian rebar prices fall on slow offtake

Domestic prices of rebar in India have fallen by around 4pc over the past month as construction activity has slowed.

Major integrated steel mills have reduced domestic prices of 12-25mm rebar by 1,500 rupees/t ($21.40/t) since the first week of April to Rs39,500/t now.

Offers from secondary producers, who manufacture rebar by melting steel scrap in electric arc and induction furnaces, were at Rs35,500/t.

Delayed payments from both public and private infrastructure projects to steel traders have slowed offtake from mills. "It is not easy to operate in these circumstances. Payments have been held up for months now," said a Mumbai-based steel distributor. Traders are likely to remain wary about stocking up on steel in the near term.

Industrial, real estate and infrastructure projects have delayed spending decisions, at least until a new federal government is formed in early June, with election results to be announced on 23 May.

The commercial real estate market has remained sluggish in India since the delegitimisation of 500 and 1,000 rupee currency notes in 2016, as India's real estate sales are mostly done in cash.

Infrastructure spending has also been slower in the April 2018-March 2019 financial year than the previous few years. The federal government handed out contracts for building and expanding 2,222km of national highways in 2018-19 against a target of 7,500km. Rebar, wire rod and scaffolding pipes are used in the construction of flyovers, barriers and structure of highways.

Delhi spent 86.6pc of its capital expenditure budget of Rs315 trillion in the first 11 months of the 2018-19 fiscal year.