India steel: Rebar demand sluggish

Indian domestic rebar prices remained subdued with restricted construction activity in some parts of the country, even as monsoon rains began receding this month.

Monsoon rains between June-September resulting in floods and disruption of transport in certain areas, have weakened rebar demand over the past weeks. But despite the ebbing rains in September, construction activity continues to be restricted because of a lack of public and private-sector funding for real estate and infrastructure projects. Banks are unwilling to lend for long-term projects as many domestic banks are challenged by large debts.

"No new orders are being placed, as contractors have been waiting for payments to be issued by government offices for the past couple of months," a Mumbai trader said.

Trading firms are unwilling to stock up inventories with such poor demand, said a marketing manager with Indian state-controlled steel producer Sail.

The estimated price of 8-12mm rebar ex-Delhi was little changed at 32,750 rupees/t ($460/t) this week. Trades during the week were done at Rs32,500-Rs33,000/t.

Large-scale integrated mills are holding on to offers of Rs33,000/t though secondary producers, which melt scrap or pig iron to produce rebar, selling at Rs32,000/t. Some east India-based secondary producers are offering rebar at a much lower price of Rs29,500/t.

Domestic rebar prices have fallen by about Rs7,000/t since the first week of June when the monsoon rains first started.

Domestic rebar prices are likely to stay in a Rs32,000-Rs33,000/t range during September 2019-March 2020 against Rs38,000-Rs39,000/t in the same period of 2018-19, projected India-focused ratings agency Icra Ratings.