Increasing Stock with Eastern India Wire Rod Mills Pull Down Prices to Over 1 Year Low
Wire rod prices in eastern India are hovering at 1.5 years low as these levels were last seen in Dec'17. On account of piling up of stocks with the mid sized mills coupled with limited demand has kept market under pressure.
The current trade reference prices of 5.5mm Wire rod in Durgapur, eastern India stands at INR 32,800-33,500/MT (USD 478-489) ex-plant. As per manufacturers, production has remained on similar line, however weak demand has raised inventories with them and if participants are to believed, each mill is having stock of more than 5,000 MT, which is quite high than the average stocks maintained.
The mills are largely selling wire rod to North-east regions, where the drawing industry processes it to make variety of wires and used for construction & infrastructure works.
It seems that the inventories are higher and the wire rod prices are likely to remain under pressure in eastern market.
Raipur is another major commercial grade wire rod producer in India in Central region, in which material is sold to across regions on logistic advantages. Meanwhile as per mills in Raipur, dispatches are on and no major stock with them due to sufficient orders in hand.
The current trade reference wire rod prices reported at INR 33,200-34,000/MT (USD 485-496) ex-plant for 5.5mm & excluding 18% GST.
Export Scenario
The mills in Durgapur heard to have concluded small parcels for exports of Wire rod at around USD 470-475/MT ex-mill, this is equivalent to USD 500/MT CNF Raxaul border (Nepal).
Further the recent floated Wire rod (5.5mm, SAE 1008) export tender by a Indian state owned large mill, is heard to under negotiation mode as bids not as per company's expectation and learned at close to USD 490/MT ex-mill. Prior to this, the tender was concluded at around USD 515/MT ex-mill during mid-Jun'19.
Statistics
India's Wire rod total production grew by 60% M-o-M in May'19, as per fresh released data by Joint Plant Committee (JPC).
India's total production for non-alloy wire rod recorded at 508,000 MT in May'19, surged by 60.25% in comparison with 317,000 MT in Apr'19.
It seems that, with assumption of seasonal better demand has influenced mills to raise production for finished steel products.
source: SteelMint
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