Indian Wire Rod Prices Hit Over A Month Low, But Margins Remain Stable

Wire rod mills in Raipur and Durgapur are facing tough competition for selling material as buyers remain cautious amidst a constant price fall for a few days. Even though the mills are offering attractive discounts, they are unable to attract buyers. Therefore, the mills are primarily focused on clearing previous orders with fast dispatches.

Indian wire rod prices of mid-sized mills have hit over a month low, while the margins (conversion spread) are maintained. Let’s delve into the reasons behind this trend, the current offers available, and the prospects of the industry.

Current Offers, Margin And Price Correction 

Mills in Raipur are offering 5.5mm wire rods produced through induction route billets at around Rs 50,500-51,000/ton ex-works, while resellers offer the same material at about Rs 50,000-50,300/ton ex-works. On the other hand, the mills based in Durgapur offer wire rods at around Rs 50,000-50,200/ton ex-works.

Despite a significant price drop, the margins of wire rod mills are maintained and hover at Rs 4,500/ton from 100mm billets to 5.5mm wire rods. This has resulted in the production being maintained with the mills, as the margins are suitable for them to produce the material.
The continued steel price fall, including semis products such as sponge iron and billets, has weighed on wire rod prices. Furthermore, with the falling prices of primary mills, the secondary market came under pressure with a slight fall in steel prices in the global market.

Future Prospect

Industry players believe that the demand for wire rods should find support in the coming weeks, as most participants are engaged in closing books before the fiscal year end in the country. Once they are done with it, the future buying of steel commodities should resume from stockists, construction, and end-user industries. This should lead to an improvement in the demand for wire rods in the future.

Insight

While the wire rod prices have hit a low, the margins are maintained, and there is hope for future improvement in demand. With the demand expected to rise, the industry is expected to see a resurgence in the coming weeks.

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