India: Wire rod prices drop m-o-m in Aug'24 on subdued buying
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India's induction furnace (IF) route steel wire rod prices edged lower m-o-m in August 2024 amid a lack of buying interest. The monthly average prices in Raipur dropped by INR 1,200/tonne (t) ($14/t) to INR 42,500/t ($506/t) in August as against 43,700/t ($520/t) in July. Similarly, in the Durgapur market, monthly average prices declined by INR 800/t ($9.5/t) to INR 42,200/t ($503/t) in August as against INR 43,000/t ($512/t) in July.
In the blast furnace (BF) segment, wire rod prices (5.5-6 mm, SAE1008) dropped by INR 2,100/t ($25/t) m-o-m to an average of INR 53,600/t ($639/t) exw-Jharkhand in August. Wire rod prices (5.5-6 mm, SAE1008) stood at INR 52,400/t ($625/t) exw-Jharkhand on 30 August 2024, as per BigMint's assessment.
Factors influencing the current market scenario
Falling raw material prices: A corresponding downward trend in sponge iron and steel billet, which are the prominent raw materials for IF manufacturers, has led to the current scenario. Sponge iron (PDRI) offers dipped by 1-3% m-o-m in the Raipur and Durgapur markets to INR 24,700/t ($294/t) and INR 25,000/t ($298/t) , respectively.
Meanwhile, the BigMint steel billet index plunged to a 3-year low, with the current price levels last seen in January-February 2021, as per BigMint's assessment. In August, prices reached INR 38,500/t ($458/t) exw-Raipur, a fall of INR 900/t ($11/t) from INR 39,400/t ($469/t) in July 24, and INR 38,700/t ($461/t) DAP Durgapur, a fall of INR 850/t ($10/t) from INR 39,550/t ($471/t) in July 2024.
Lack of buying interest from binding, GI wire sectors: Manufacturers of galvanised iron (GI) and binding wire, for which wire rod is the prominent raw material, resorted to need-based buying, taking into account the ongoing scenario. They also avoided bulk bookings, preferring to wait until there was more clarity on the prevailing market trend. These sectors cut their production by approximately over 30-40% during the concerned period.
Drop in primary wire rod prices: Prices of primary wire rods declined m-o-m in August amid slow buying interest. Mills reduced wire rod prices m-o-m for early-August sales, while demand from buyers remained weak, weighing on market sentiments.
Wire rod production was affected in July-August, as major mills underwent annual maintenance shutdowns and repairs. Additionally, limited availability of semi-finished steel (billets) constrained production volumes. However, by mid- to late August, mills resumed production and reopened their offers at lower prices compared to previous operating levels.
Outlook: Market participants expect prices to remain range-bound in the coming days, as they feel prices have bottomed out. Fluctuations might be evident amid a bid-offer disparity among buyers and sellers.
