India: IF wire rod prices climb upward in Sep'24 on improved buying

• Sponge iron, billet prices see uptrend
  
  
• Production cuts to weigh on supply
  
  

India's induction furnace (IF) route steel wire rod prices surged m-o-m in the major central and eastern markets in September 2024. Raipur's spot prices rose INR 3,200/tonne (t) ($38/t) to INR 45,300/t ($539/t) as against INR 42,100/t ($501/t) in August, and Durgapur's increased by INR 2,300/t ($27/t) to INR 44,100/t ($525/t) as against INR 41,800/t ($497/t) in August.

In early September, trading activities remained slow owing to a lack of clarity regarding the market trends, which pushed prices down. However, in the latter half, a sudden spike in prices was seen following an improvement in buying activities as the monsoon receded. In the two major markets of Raipur and Durgapur, prices rose after touching a low of INR 40,500-40,600/t ($482-$483/t).

In the blast furnace (BF) segment, wire rod prices (5.5-6 mm, SAE1008) dropped INR 700/t ($8/t) m-o-m to an average of INR 52,900/t ($630/t) exw-Jharkhand in September 2024.

Factors supporting the price rise

Raw material prices rise: A similar uptrend was observed in sponge iron and billet prices. BigMint's billet index rose INR 2,500/t($29.75), while sponge iron (PDRI) prices increased by INR 2,000/t ($24/t) exw-Raipur. Additionally, the pig iron auction from the National Mineral Development Corporation (NMDC) saw higher bids, with the entire quantity sold at INR 34,700/t ($413/t), up by INR 1,500/t ($18/t) from the previous auction. Furthermore, a shortage of high-grade iron ore fines, caused by production disruptions during the monsoon, led to aggressive bidding in the latest iron ore auction from the Odisha Mining Corporation (OMC).

Demand strengthens: Improved demand, specifically from end-consumer industries such as galvanised iron and binding wire manufacturers, for which wire rods are a crucial raw material, has led to a rise in prices. As a result, buyers booked a decent volume of material this week for restocking purposes. Subsequently, thinking that prices had touched the bottom, suppliers raised their offers to secure better margins.

Mills raise prices for Oct'24 sales: Indian tier-1 mills increased wire rod prices by up to INR 2,000/t ($24/t) for early-October 2024 sales, sources informed BigMint. Following this, BigMint's assessment for wire rod prices (5.5-6 mm, SAE1008) increased by INR 1,400/t ($17/t) w-o-w to INR 55,400/t ($660/t) exw-Jharkhand.

Production cuts in Aug'24: Many mills had resorted to production cuts in August, owing to sluggish demand amid the monsoon and a liquidity crunch. This step was also taken to control the free fall in prices. As per data released by the Joint Plant Committee (JPC), total wire rod production stood at 5,84,000 t in August, dropping 9.3% from 6,44,000 t in July.

Outlook

Prices are likely to remain supported in the near term, owing to rising raw material prices and the limited availability of material due to production cuts. Another factor that may contribute is that NMDC has hiked list prices of iron ore, that is calibrated lump ore (CLO) and fines by INR 300/t($4) and INR 400/t ($5), respectively, for October deliveries.