October 07, 2008

Rebar price drop weakens demand

It is learnt that small and medium real estate developers and engineering contractors are now relived of the increasing trend in rebar prices in the first 4 months of this year and are adopting cautious approach by limiting their buying to bare minimum, resulting in week demand scenario.

During the period, when prices were surging, the entire supply chain was accumulating stocks anticipating higher prices but with the government intervention and announcement of freezing prices for 3 months by steel majors, the market sentiment is quite week. The supply chain cleared their inventories during this period and is now buying only limited quantities anticipating stable if not further drop in prices.

This has resulted in a severe drop in sales for almost all steelmakers including from the secondary sector.

Although steel majors such as TATA Steel, SAIL and Vizag Steel announced price cut of INR 2000 per tonne for rebars last week, the smaller rebar makers have reduced their prices by substantial amounts to bring their prices below INR 40,000 levels on landed basis.