India: Wire rod prices drop amid slow trading activities in major markets

India's induction furnace(IF)- route wire rod market was down by INR 100-300/t w-o-w in terms of prices, while suppliers observed lifting and fresh-booking orders are slow in the major markets of Raipur and Durgapur.

As per SteelMint's assessment, IF wire rod trade prices as on 16 Dec'23 in the Raipur market were assessed at INR 44,600/t and in the Durgapur market at INR 44,200/t which is down by INR 100-300/t w-o-w in both the markets.

Notably, for IF-route wire rods, Raipur and Durgapur are the major supply centres feeding various other markets across the country. As per data maintained with SteelMint, cumulative daily wire rods production capacity of these two markets stood at around 20,000 tonnes (t).

In blast furnace(BF)-route wire rod (5.5-6mm, SAE1008) prices fell by INR 800/t on weekly basis to INR 52,500-53,000/t, exw-Jharkhand.

Weekly trade dynamics

Moderate buying enquiries: Purchase inquiries and transactions for wire rods in the spot market have continued to be need-based. Traders exhibit hesitancy in procuring the material, and manufacturers note a sluggish pace in fulfilling previously booked orders, resulting in a notable rise in inventories at mills. This delay in the decision-making process for bulk purchases has contributed to a dampening effect on market sentiments.

Trends in raw material: Prices for key raw materials, such as sponge iron (PDRI FeM 80%), a significant feedstock in furnaces, have displayed strength. In both Durgapur and Raipur, prices have risen by INR 100-200/t w-o-w. Presently, the prices stand at INR 27,600/t exw Raipur and INR 26,700/t exw Durgapur. This robust trend in raw material prices has compelled wire rod manufacturers to maintain elevated prices despite subdued buying activities, as per insights from SteelMint.

Price movement: Initially, suppliers set higher offer prices, quoting around INR 45,000-45,200/t exw, specially in the Raipur market. However, limited buying interest from buyers at higher offer prices forced sellers to either offer trade discounts or reduce prices in order to boost sales. Trade reference price of wire rod as on 16 January, 2023 stood at INR 44,500-44,900/t exw Raipur and INR 44,000-44,300/t exw Durgapur, size 5.5 mm.

Trends in BF route wire rods market: In BF-route wire rod also prices continued to show downtrend as buyers have adopted wait and watch mode due to fears of continuous price fall, which resulted in slow buying interest weighing on the market sentiments. On m-o-m basis, prices have registered a fall of INR 1,100/t to INR 53,300/t exw-Jharkhand in December against INR 54,400/t last month.

Outlook: Prices are likely to remain under pressure in near term considering the current scenario. However, fluctuating price trends in raw materials (steel billets) may lead to volatility in the market.