India steel: Rebar prices slide on sluggish real estate

India's domestic rebar prices have continued to fall, despite receding monsoon rains in October, as construction activity remained constrained because of a lack of funds.

"Rebar sales typically improve during October, but I am still waiting for any signs of a demand pick-up," said a Mumbai-based trader.

Developers of commercial and residential construction projects are short of cash and are unable to place any new rebar orders, said the manager of a Delhi-headquartered steel mill.

July-September quarter sales of residential projects in India dropped by 20pc from a year earlier to 55,080 units, according to a report by Mumbai-based research firm Anarock Property Consultants. "This decline was mainly due to the ongoing liquidity crisis and the slowdown in the economy resulting in tepid demand," the report said.

Unsold inventories of residential projects totalled 655,710 units during July-September. Mumbai alone accounted for 220,870 unsold units during the quarter.

New real estate project launches have slowed considerably amid the large unsold inventories that could pressure rebar demand over the next several months.

Traded prices for rebar 8-12mm this week fell to 32,000-32,500 rupees/t ($451-458)/t, down by Rs500/t from last week.

Large-scale integrated mills are holding on to offers of Rs32,500/t though secondary producers, which melt scrap or pig iron to produce rebar, selling at Rs31,500/t. Some east India-based secondary producers are offering rebar at a much lower price of Rs29,500/t.

Domestic rebar prices fell by about Rs 7,500/t since the first week of June when the monsoon rains first started.