India steel: Rebar up on a rise in purchases

India's domestic rebar prices increased this week as stockists and retailers stepped up purchases in anticipation of mills hiking offer prices sharply in January.

There is market talk that large integrated mills may use the global trend of rising steel prices to justify a January price hike, despite sluggish consumer demand for long products in India.

Stockists and retailers of long products are also stocking up to cover their requirements during the 10-17 January Sankranti festival, when large traders will be away and it may be difficult to buy steel products at short notice.

Stockists and retailers purchase steel from large traders and sell to consumers, while traders buy steel directly from producers.

While retailers and stockists are buying material at increased prices, traders are busy liquidating their stocks. Traders are averse to building stocks of rebar, buying only to meet confirmed purchase orders.

The Argus-assessed price of rebar with 8mm-12mm thickness and produced by major integrated steelmakers increased by 2,000 rupees/t ($28/t) over the past week to Rs35,500/t. Prices of rebar produced in electric arc furnaces increased by Rs1,000/t to Rs33,000/t.

"So much rise [in prices] over a short period is not sustainable," said a Mumbai-based trader.

Construction activity continues to be dull because of a lack of funds at developers and builders. Most rebar demand is from public-funded infrastructure projects, although these projects are progressing at a slow pace.