India: Induction furnace route wire rod prices fall by up to INR 900/t w-o-w

India's induction furnace (IF) route wire rod market saw weak demand despite lower offer prices quoted by suppliers in the major supplying markets of the central (Raipur) and the eastern (Durgapur) regions of the country.

On a weekly basis, as per SteelMint's assessment, the average trade reference prices for wire rods in Raipur decreased by around INR 900/t to INR 49,800/t as against INR 50,600/t exw. Similarly, in Durgapur market, it decreased around INR 750/t to INR 49,700 against INR 50,450/t exw in the previous week.

As market remained inconsistent throughout the week, producers were unable to hold higher offer price despite hiked sale prices announced by blast furnace route wire rod mills for early February sales. As a result, prices fell further owing to sluggish demand, specifically in the IF route finished long steel segment.

Factors behind fall in prices

Weak buying interest: Wire rod purchase enquiries and trades were subdued in the spot market throughout the week due to lack of buying interest from end-user industry like GI and binding wire manufacturers. Traders resorted to need-based procurement of materials which led to a decline in sales. Deals for around 8,150 t were recorded in Raipur market by SteelMint during the week.

Currently, mills are under a bit of inventory pressure. If the same scenario continues in the upcoming week, manufacturers might adjust their production levels accordingly.

Decline in raw material prices: The input cost of primary raw material for wire rod like sponge iron and steel billet prices dipped down w-o-w. It led to a similar trend in the finished steel segment as well. At present, sponge iron prices (PDRI, Lumps, FeM 80%, +/-1) stand at INR 31,600/t (exw- Raipur), down by INR 400/t w-o-w. Meanwhile, billet prices (100x100mm, IS 2831) stand at INR 45,800/t (exw), down by INR 1000/t w-o-w, as per SteelMint's billet index in Raipur.

Constant price correction in the market since last 3 weeks has also impacted the conversion spread from billet to wire rods, which is currently hovering at around INR 3,700-4,000/t.

Outlook: Wire rod steel market is likely to remain volatile in the coming days, as manufacturers might take measures in order to escalate sales. Traders might continue to opt for wait-and-watch mode until buying enquiries improve from end-users' side.