India: IF-route wire rods prices surge INR 1,500/t w-o-w in key markets

India's induction furnace (IF)-route wire rods market saw a rise in prices by INR 1,500/tonne (t) w-o-w in major supplying markets of eastern (Durgapur) and central (Raipur) regions.

On a w-o-w basis, trade reference prices of wire rods in Raipur jumped by INR 1,400/t to INR 51,300/t exw as on 5 January 2023 as against INR 49,900/t in the previous week while prices in Durgapur increased by INR 1,500/t to INR 51,800/t exw, SteelMint assessment shows.

Notably, the Raipur and Durgapur markets are the major supplying centers of IF-route wire rods in the country. As per data maintained with SteelMint, cumulative daily wire rods production capacity of these two markets stands at around 20,000 t.

However, currently a few prominent wire rods suppliers have either halted/adjusted production rates or shifted to selling other commodities to get better margins.

Factors triggering the price hike-

• Active buying enquiries: Wire rods' purchase enquiries and transactions remained active in the spot market in the first half of the week as manufacturers received adequate booking orders, pushing them to hike prices. However, buying slowed down later at higher offers at the start of new calendar year 2023. While mill owners were reluctant to sell material at lower prices, traders sold sizeable volumes, maintaining sufficient profit margins to reduce inventory pressure. Deals of over 10,000 t were recorded by SteelMint in the Raipur market during the week.
  
  
• Increasing raw material prices: The disruption in sponge iron production in Odisha due to the World Cup Hockey Tournament has led to an increase in sponge iron prices which also pushed up semi-finished products (billets) prices. As a result, higher production costs also lent support to trade-level wire rods prices.
  
  
• Higher BF-route wire rods prices: Blast furnace-route wire rods manufacturers hiked prices by up to INR 2,700/t for early January 2023 deliveries, SteelMint reported. JSW Steel increased prices (5.5mm SAE 1006 wire rods) to INR 57,500/t and SAIL to INR 57,500/t, on landed Mumbai basis, excluding GST at 18%.
  
  

The price hike by primary players also supported IF-route wire rods prices.

Outlook

Prices in key markets are less likely to go higher owing to low trade volume at the current levels as observed in last 2-3 days. However, the raw material price trend may directly impact wire rods prices and keep them volatile, SteelMint notes.