India steel: Rebar prices drop on falling sales

India's domestic rebar prices fell by 500-1,000 rupees/t ($7-14/t) this week as sales fell, reversing a brief increase in demand last week.

Domestic prices of rebar 8-12mm thickness produced by the main integrated steel producers fell by Rs500/t this week to Rs32,200/t. Prices of rebar made in electric arc furnaces dropped by Rs1,000/t to Rs31,700/t.

Trading firms booked fewer orders this week. Rebar sales had increased over the past couple of weeks only because of trading firms replenishing low inventories, said the marketing manager of a Delhi-based mill. But rebar demand in construction and infrastructure projects remains sluggish because of a continuing liquidity crunch in the economy.

A prolonged monsoon season during June-October led to a lull in construction activity resulting in weaker rebar demand. Trading firms had stopped refreshing inventories during this period, with buying only done on an immediate requirement basis. Domestic rebar prices have fallen by about Rs7,500/t since the first week of June, when the monsoon rains first started, through to the first week of October.

Investment in buildings and machinery, measured by gross fixed capital formation, grew by 1pc during July-September period, according to the Centre for Monitoring Indian Economy (CMIE). India's quarterly GDP growth slowed to a six-year low at 4.5pc during July-September.

The Indian government tried to boost the economy by increasing its expenditure by 15.6pc compared with a year earlier during July-September, but this scale was still not enough to stop the slowing economic growth, the CMIE report said.