BigMint: India's HRC-rebar reverse spread widened again in March 2025, after three months of contraction. The price gap between hot-rolled coils (HRCs) and blast furnace (BF) rebars stood at INR - 4,600/tonne (t) ($54/t) last month compared to INR - 4,400/t ($51/t) in February, a difference of INR - 200/t ($2/t).
Generally, HRCs are sold at a premium of INR 4,000-4,500/t ($47-52/t) to rebars; the spread has been in reverse gear for the past seven months.
Both HRC and BF rebar prices surged in March, bolstered by supply shortages and the safeguard duty recommendation. However, rebars gained more than HRC, which caused the reverse spread to widen.
Trade-level HRC (IS 2062, 2.5-8 mm) tags rose by INR 1,900/t ($22/t) to a monthly average of INR 50,300/t ($586/t) exy-Mumbai, while BF rebars (IS 1786, 12-32 mm) climbed up by a higher INR 2,100/t ($24/t) to INR 54,900/t ($639/t) exy-Mumbai.
Factors impacting spread in Mar'25
HRC offers tick up amid supply crunch: A supply shortage emerged in March amid market buzz that certain leading steelmakers had taken some of their production units offline during February. The steady decline in imports also kept supplies tight in the trade market. As per BigMint's data, bulk imports of HRCs declined 26% to 297,505 t in March from 401,621 t in February maid impending safeguard duty implementation.
These factors gave the seller side the upper hand, enabling them to raise offers substantially and keep these levels firm. In tandem, leading steelmakers raised list prices by INR 1,100-1,500/t ($13-17/t) for March sales.
However, it is worth noting that demand still continued to be somewhat dull, with a segment of buyers showing resistance to the considerable price hike.
Safeguard duty proposal boosts market sentiment: The long-awaited safeguard duty recommendation finally arrived on 18 March, which was another factor that kept sellers upbeat. Specifically, the Directorate General of Trade Remedies (DGTR) proposed a provisional safeguard duty of 12% for 200 days on 90% of imported steel products, as well as a threshold HRC import price of $675/t.
Immediately after the announcement, trade-level prices shot up, with the ongoing supply shortages lending support. Mills also raised list prices by INR 1,000-1,500/t ($12-17/t) the same week, accompanied by a reduction in price support measures.
Exports to EU gain momentum: Towards the month-end, domestic prices also received support from a rebound in export activity. The European Commission spared India from the anti-dumping duties, instead levying them on Egypt, Vietnam, and Japan. This boosted trade momentum for Indian HRC exports in the EU for a short period, though weak demand capped shipment volumes.
BF rebar trade segment sees supply shortages as project demand picks up: Rebar inventories at primary mills declined by 30% m-o-m in early-April, amid a 20% rise in domestic sales in March. Major markets witnessed supply shortages, which triggered a surge in trade-level prices.
The supply squeeze followed robust demand from the projects segment, with project completion deadlines approaching before the close of FY25. Due to limited availability of stocks, mills diverted material meant for the trade network to the project segment. Notably, in the projects segment, prices increased by 3,300/t ($38/t) m-o-m to a monthly average of INR 53,900/t ($623/t) FOR Mumbai.
Additionally, logistical disruptions affected material flow to the distributor channel. Certain sizes were also out of stock.
Mills raise list prices multiple times throughout March: While primary steelmakers raised rebar list prices by up to INR 2,000/t ($23/t) for early-March, a number of interim price hikes were also implemented throughout the month.
Supply shortages and the uptick in demand were the primary drivers of this. However, positive market sentiment from the safeguard duty recommendation also spilled over into the rebar segment, despite longs being beyond the scope of the investigation.
Active trade momentum propels IF rebar tags: Induction furnace (IF) rebar (Fe 500) prices rose by INR 1,300-2,900/t ($15-34/t) m-o-m across markets, driven by bulk procurement in both the retail and project segments. Significantly, prices in most major markets hit a 5-month high.
Mills faced no selling pressure, with inventories down to 7-8 days against the usual 8-10 days. There was also a high backlog of previous orders awaiting delivery. Manufacturers raised their offers while limiting discounts.
Prices of raw materials - steel billets and sponge iron - also surged, pushing up costs. In Raipur, billets increased by INR 1,850/t ($21/t) m-o-m to INR 41,850/t ($484/t), a six-month high, and sponge iron (PDRI FeM 80% +/- 1) rose by INR 1,200/t ($14/t) m-o-m to INR 26,200/t ($303/t) exw.
Outlook
In April, the HRC-rebar spread is unlikely to normalise, and initial trends suggest a further expansion. While rebar tags are expected to continue increasing, with mills announcing significant list price hikes for both products, HRC tags may decline, despite an increase in list prices.
In particular, rebar list prices were lifted by up to INR 3,000/t ($35/t) to INR 55,500-57,000/t ($650-668/t) on a landed basis for early-April deliveries compared to end-March levels. Consequently, trade-level prices are likely to remain strong, given that the supply deficit will continue, reportedly following production cuts by a leading steelmaker. Additionally, IF rebar tags may keep on with their uptrend, with manufacturers relieved from inventory pressure amid robust sales.
Meanwhile, contrary to expectations, trade-level HRC values declined over the past few days, as subdued demand persisted.
Last week, mills raised HRC list prices by INR 2,000-2,300/t ($23-27/t) to INR 52,000-53,000/t ($608-620/t) ex-Mumbai for April sales, buoyed by supply constraints, lower imports, and positive sentiment due to safeguard duty recommendation.
However, buyers showed a marked resistance to higher HRC prices, and suppliers trimmed offers to encourage trades. In fact, over the past few months, certain suppliers had withheld material, as selling these stocks at the previous lower prices would have impacted profit margins. With prices much higher in April, these suppliers felt encouraged to sell off their old stocks by reducing prices.
Additionally, in early April, following the steady rise in March, domestic HRC prices stood close to the landed cost of imports.
However, with buyers unwilling to raise input costs, given that demand in end-user segments is still slow, climbing HRC prices may push some buyers towards imported material. As a result, there is a growing sense of unease that the safeguard duty, when imposed, may ultimately have a weaker impact than expected.
Source:BigMint
