Indian Mid-Sized Wire Rod Market Remains Positive In June Beginning

After a sharp price fall during May 2023, the Wire Rod market in India reported a surge in prices at the beginning of June 2023 with a rise of about Rs 1,000/ton ($12) in a few locations. Low margins and production cuts by some plants have influenced the market dynamics. Let’s explore more about the same:

Close Monitoring

Suppliers are closely monitoring the Sponge Iron and Billet markets to determine more changes in Wire Rod offers due to low margins with the plants. During May 2023, the Wire Rod prices in India declined about Rs 2,500-3,000/ton, following the sharp reduction in Sponge Iron, Billet prices on low demand, and poor trends globally, Ofbusiness assessed.

Margins Improve And Production Cuts

The current margins, known as the conversion spread from billet to Wire Rod, are hovering around Rs 3,500-3,700/ton. This marks a rise of Rs 300-500/ton week-on-week, compared to approximately Rs 3,200-3,500/ton in the last week of May 2023. The prices and conversion spread have increased due to slightly improved demand. Additionally, some plants in Raipur have implemented production cuts, indirectly supporting the Wire Rod market. Certain plants recently have shut down their re-heating processes and are utilizing the continuous casting route. Considering the existing demand, this effectively reduces or balances the oversupply in the market.

Current Prices

• Here are the current prices:
  • 5.5 mm Wire Rods (Induction Route)- at around Rs 47,500-47,700/ton in Raipur and Rs 47,000-47,500/ton in Durgapur; ex-works.
  • Billet Prices- Rs 43,800-44,000/ton in Raipur and Rs 43,500-43,600/ton ex-works in Durgapur, resulting in a conversion cost of Rs 3,500-3,700/ton.

Market Outlook

Earlier in May 2023, it was reported that planned production cuts in June 2023 would help maintain the stability of Wire Rod mills. It seems to be a reality in June, and if demand recovers, there is a possibility that producers’ margins may improve further.

OFB’s Insight

The Indian Wire Rod market has shown a surge in prices in June 2023, after a significant price decline in May 2023. If demand picks up, there is potential for further improvement in producers’ margins. Industry participants closely monitor the market for any shifts in demand and pricing trends.

Read more: Steel Market Update: Indian Primary Mills Revise Steel Prices

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