India: Wire rod prices edge higher m-o-m in Aug'23

India's induction furnace-route wire rod prices witnessed an upward trend in August 2023. The average trade reference price of IF wire rod in Raipur and Durgapur were at INR 46,300/t exw, which increased by INR 1,200/t and INR 1,900/t m-o-m, respectively.

Blast furnace (BF)-route wire rod (5.5-6.0mm, SAE 1008) prices remained stable, as trade-level prices in August were at INR 52,100 /t exw Jharkhand.

Notably, as per data released by Joint Plant Committee (JPC), an increase of 4% in the production of wire rods jointly by IF- and BF-route mills was recorded at 632,000 tonnes (t) in July as against 605,000 t in June. Production rose by 15.66% to 4. 12 mnt during January-July this year compared to 3. 56 mnt during the same period last year.

Why prices increased?

Higher prices of raw materials, semis: An upward trend in sponge iron and steel billet prices was observed in August which pushed manufacturers to increase prices of wire rods. Sponge iron (PDRI, FeM 80%) prices increased by INR 2,800/t in Raipur to INR 29,300/t exw and by INR 2,700/t to INR 28,500/t DAP in the Durgapur market in August. Billet prices rose by INR 1,500/t m-o-m to INR 42,800/t exw Raipur and to INR 43,000/t DAP Durgapur.

Rise in exports- Amid rising production of wire rods and also the surge in raw material prices, domestic manufacturers received enquiries from neighbouring countries, as per Nepal customs data, export volumes to Nepal increased by 7% m-o-m to 19,959 t in August. In January-August, export volumes rose by 41% to 120,583 t as against 85,219 t in the same period of last year. Nepal is a major wire rod importer from India and demand in that country also impacts the domestic market.

Improvement in buying activity- The rise in prices and positive market sentiments prodded traders to book bulk volumes which reduced the inventory pressure on sellers. This also led to an increase in prices as manufacturers reported good dispatches.

Price hike by BF-route mills- Indian blast furnace route wire rod manufacturers increased prices for early September sales by up to INR 2,500/t ($30/t). After the hike prices stand at:

ESL Steel : INR 56,500/t ($683/t), landed Delhi
RINL: INR 54,450/t ($658/t), exy-Chennai
JSW Steel: INR 53,500/t ($644/t), landed Mumbai

Outlook: Market participants are of the view that volatility in the prices may persist in the near term.