Indian Wire Rod Prices at Month Low, Margins Stable

2024-21-06 Team Jindal Panther

Indian Wire Rod Prices: The Indian wire rod prices experienced a decline from August 2023 to a month's low in July 2023. Nevertheless, there was a positive aspect to the situation as far as profits were concerned. Come November 2023, and everything changed. Steel Wire Rod (5.5 mm) priced settled on USD $56820/MT ex Mumbai (India). Why did that happen?

The dynamics of such price movements depends on many considerations including volume of supply, factors that influence the industry’s demand, and specifics of the manufacturing process that goes behind the scenes. However, the supply of these wire rods is dependent upon the manufacturer's ability to produce this product and this defines the current price levels in the wire rods market.

Market Update: Indian Wire Rod Prices Reach Monthly Low

Lately, steel wire rod prices in India hit a low point. There are a few reasons behind this drop. For instance, the prices for Steel Wire rods (5.5 mm) from Mumbai settled at USD 56820/MT, causing a ripple effect. Moreover, trading in European countries slowed down because buyers already had enough credit, adding to the downward trend in steel wire rod prices.

Even though steel wire rod prices have been dropping, the profits haven't taken a big hit. Here's why:
 

1. Despite the falling trend in steel wire rod prices in India, the profit margins haven't been greatly impacted.

2. Looking at historical data and predictions for wire rod prices over a year, shows that the margins are quite steady.

3. When checking the historical prices for steel wire rod futures within a certain period, there's only a small 2.60% increase in price, indicating minimal fluctuations.
    

Steel Wire Rod Prices Trend and Forecast

The global demand for wire rods used in construction depends on how much is needed for current and future building projects. This demand goes up or down based on what buyers want. To understand the best deals and opportunities in the worldwide market, it's crucial to look at wire rod indexes. These show the trends and movements in the wire rod trade everywhere.

When dealing in the steel wire rod market, here are some important points to keep in mind:

1. Price Forecast: The expected price for carbon steel wire in North America for the next 12 months is available in tonnes (t), short tons (lb), and kilogram (kg).

2. Market Demand: The need for wire rods depends on buyers and ongoing or planned construction work.

3. Import and Export Stats: Wire rod indexes often have tables showing daily prices, price analysis, and import/export numbers related to wire rods.

Indian Wire Rod Production and Outlook

In the financial year 2022-23 (FY23), India's wire rod production stayed steady, slightly decreasing by 4% to 6.41 million tonnes (mnt) compared to 6.68 mnt in FY22. The industry's future looks positive regarding demand over the medium to long term.
 

Here are some key points about the industry:

1. Price Changes: The average prices of BF-route wire rods in the Jharkhand market went up by INR 3,850/t to INR 52,100/t in FY23. Meanwhile, average IF-route prices increased by INR 48,250/t to INR 51,800/t.

2. New Capacities: Additional IF-route capacities were introduced, aiding in maintaining production stability. Mills were launched in Jharkhand and Odisha, each with an annual production capacity of about 0.3 mnt.

3. Production by Major Producers: Leading producers in the primary sector were the Steel Authority of India (SAIL) and Tata Steel. SAIL saw a 6% increase in production, while Tata Steel's production remained constant. On the other hand, JSW Steel witnessed a 34% year-on-year decrease to 0.76 mnt.

4. Demand Expectations: The demand for wire rods is expected to be strong. This is due to the urgency to finish specific infrastructure projects before the monsoons, increased rural demand for barbed wires before the monsoon season, and a hastened focus on government-funded infrastructure projects before the upcoming general elections in FY24.

How have Wire Rod Prices in India Compared to Other Countries?

Comparing wire rod prices in India with other countries reveals these key insights:

• Domestic Market: Aspects of price competitiveness were exhibited within India’s domestic market where BF-route wire rod prices increased up to INR 59,100/t per ton in financial year (FY) 23 while remaining at USD 764. In addition to this, the IF-route prices were also up by about INR 3,850/t to INR 52,100/t.

• International Market: The price of steel wire rods (5.5 mm) in Mumbai amounted to $46820/MT which is much cheaper than in European countries. The price of steel wire rods (5.5 mm) in Mumbai amounted to $46820/MT which is much cheaper than in European countries. Steel wire rod price of 5.5 mm fell up in Mumbai and was cheaper than in Europe.

• Export Market: Indian producers were faced with more export interest particularly as wire rod, Stirrups, and Footings production grew faster than raw material costs which rose steadily and resulted in a rise in inquiries by companies from Nepal and other neighbour countries. The export volumes to Nepal shot up by 41% from 86,000 tons to 120,583 tons for the January-August period, which is a reflection of increased interests in these markets.

In conclusion, the Indian wire rod market reflects a recent downturn in prices, particularly noticeable in November 2023, while maintaining stable profit margins. This shift in pricing dynamics, influenced by various market factors, hasn't significantly impacted profit margins. Despite challenges in exports and fluctuations in global prices, the industry remains resilient, showcasing adaptability in the face of changing market dynamics. 

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Indian Wire Rod Prices at Month Low, Margins Stable FAQs

Q. What has been causing Indian wire rod prices to be month-low?

Ans: The prime causes for Indian wire rod prices to be month-low was attributed to factors such as the reduction in trade activities in Europe and lowered demand culminating in weekly highs.

Q. Has the fall in iron wire rod prices impacted the profits?

Ans: Well, the decline in iron wire rod prices hasn't affected profits due to stable margins and management of production costs and factors.

Q. What influences the dynamics of Indian wire rod prices?

Ans: The volumes of supplies, as well as the general industry’s demand and particular manufacturing procedures, primarily affect the Indian wire rod prices.

Q. How reliable are the historical wire rod prices data and forecasts? 

Ans: Steel wire rod prices in futures were barely fluctuating since the historical data as well as future forecasts indicate a slight increment of 2.60%.

Q. What influences the stability of Indian wire rod prices? 

Ans: The wire rod prices in today's market depend on some other factors like supply volumes, demand fluctuations, and others, also associated with highly specific manufacturing particularities.