Indian Wire rod prices remain weak in Jul'23

India's induction furnace route wire rod prices declined further m-o-m in July owing to sluggish buying interest. The average trade reference price was INR 45,100/t exw Raipur, down INR 2,300/t m-o-m. Meanwhile, in Durgapur prices fell by INR 2,500/t to INR 44,400/t.

Blast furnace route wire rods (5.5-6.0mm, SAE 1008) also witnessed a decline in trade-level prices in July by INR 1,700/t m-o-m to 50,100/t exw Jharkhand.

Notably, as per data released by Joint Plant Committee (JPC), a minor increase of 2.5% m-o-m in production of wire rods by both IF and BF-route mills was seen in June. Output rose to 605,000 t in June as against 590,000 t in May. The same rose by 14.5% to 3.49 mnt during January-June compared to 3.05 mnt in the year-ago period.

Why prices fell?

Downtrend in raw material, semi-finished steel prices- Plunging iron ore and coal prices led to a decline in prices of semi-finished as well as finished steel. Mills had already stocked sufficient raw materials before the onset of monsoons and thus buying remained slow.

Declining prices of sponge iron, as well as steel billet, further prompted a decline in prices. On a monthly basis, sponge iron (PDRI Fe-80%) prices dropped by INR 1,200/t in Raipur to INR 26,500/t exw in July; meanwhile, prices dropped by INR 1,600/t to INR 25,800/t (PDRI Fe-80%-DAP) in Durgapur.
Steel billet prices fell by INR 2,300/t m-o-m to INR 41,300/t exw Raipur and by INR 2,400/t to INR 41,500/t DAP Durgapur in July.

Dull market sentiment- Subdued domestic demand has impacted market sentiments. Buyers have resorted to need-based buying owing to uncertainty in the market. Manufacturers of binding wire and GI wire have also adjusted their production which, in turn, impacted wire rod sales, as it is the key raw material for these products. As a result, prices started declining. Further, heavy rainfall also impacted trading activities to a great extent.

Limited exports- The lack of exports of wire rods forced manufacturers to heavily rely on domestic buyers. Another reason for the decline is limited imports by Nepal, one of the top importers of wire rods from India, as it is focusing on becoming self-sufficient in terms of finished steel production. As per data maintained with SteelMint, wire rod imports by Nepal from India dropped 24% in July to 16,600 t compared to 21,900 t in June.

Primary mills roll over prices- Indian primary mills have rolled over wire rod prices over end-July price levels.

Current wire rod prices for early-Aug'23 sales stand at:
JSW Steel: INR 51,500-52,000/t ($621-627/t), landed Mumbai.
Jindal Steel & Power Limited (JSPL): INR 53,000/t ($640/t), landed Delhi
Steel Authority of India Ltd(SAIL): INR 53000/t ($640/t), landed Mumbai

Outlook-The market is likely to remain volatile as sellers are trying to raise offer prices since July end. However, buyers still remain cautious and are avoiding bulk procurement at the moment.