Sluggish Demand Prompting a Downtrend in Indian Steel Wire Rod Prices

New Delhi: According to our sources, domestic Steel Wire Rod prices have tumbled, especially for June deliveries, by more than 8.8% month-on-month. It is among the abruptest falls that domestic Steel Wire Rod prices have witnessed over the last two months. Weak demand, piled-up inventories, and a plunge in iron-ore prices amidst another round of COVID-19 outrages in China have led to disruptions in the supply chain, and the ongoing impact on exports are considered factors weighing on market confidence.

Steel wire rod factories in Raipur have reduced their quotation offers. Furthermore, the drop in semi-finished prices has recently impacted steel wire rod prices, forcing domestic manufacturers to reduce their offers despite the delay in delivering previously booked orders. However, this week, trade discounts over domestic Steel Wire Rod prices drifted at around 2% per tonne. Steel Wire Rod prices are already down in most of the markets. Market sentiment remains poor, and bookings are at the slowest pace. Many buyers have opted for a wait-and-watch approach and await a further price decline before heading for larger bookings. Market participants anticipate that monsoons are coming, leading to a further price fall in Steel Wire Rod.

Since the application of a 15% export duty by the Indian authorities, Steel Wire Rod supply in the domestic market has increased. However, export viability has decreased, and no significant export bookings have been reported this week. Firms are bypassing offers for usual material since this would draw the 15% export duty. There are further chances of downward corrections in Steel Wire Rod prices in the short term, with raw material prices showcasing drops. However, these corrections may not be as steep as those witnessed so far in June.

According to ChemAnalyst, "The Steel Wire Rod prices are anticipated to decrease further in the upcoming months." The high energy tariff rates are global, and Steel Wire Rod prices are high. However, India has already started booking Russian consignments at a discount of up to 33%, improving coal supplies and easing raw material prices, and, in turn, further supporting corrections in Steel Wire Rod prices. The raw material price revisions' overall impact on production costs will be felt in the next quarter.