Construction sector may feel the pain of RINL illness

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Subscribe to enjoy similar stories. Mumbai: Prices of steel rebars, a key component for construction, have seen a rise in recent months and can see upward movement in the coming weeks as building activity picks post monsoon, experts said, raising margin concerns for real estate and infrastructure firms. The price increases are partly due to a supply shortage amid a production slump at state-owned Rashtriya Ispat Nigam Ltd (RINL), a major manufacturer of long steel, which is used to make rebars.

Average rebar prices saw a cumulative uptick of ₹2,400 per tonne over two consecutive weeks in late September and early October, according to a report from BNP Paribas dated 7 October. That translates to a price hike of about 4-5%. JSW Steel Ltd and ESL Steel Ltd hiked rebar prices by about ₹1,000 per tonne while Jindal Steel and Power Ltd (JSPL) made a ₹2,000 per tonne upward revision during this period.

Also read | China’s real estate package stimulates Indian steel The prices are expected to rise further in the coming weeks as demand rises. In India, construction activity peaks in the latter half of a financial year, post the monsoon season. “We expect a sharp rise in rebar prices due to the RINL production cuts.

RINL is a big player in terms of long products capacity and their production cuts are causing 4.5-5 million tonnes of annual shortage," said Priyankar Biswas, India analyst, industrials, logistics and metals, BNP Paribas. “In April-May also, rebar prices went up when workers at the Gangavaram port (in Andhra Pradesh) went on a strike, curtailing RINL production," he said. Steel represents about 20% of the input cost of construction firms, according to Kushagr Ansal, director, Ansal Housing.