Indian secondary wire rod makers fetch good margins in Dec’20

• Conversion spread firm up by upto 35% in December m-o-m
• Restricted supply by primary mills is a key factor behind the uptick in prices
• Exports to Nepal increased fivefold of which the secondary mills share was around 70%

The mid-sized wire rod plants located in Raipur & Durgapur registered good margins (conversion spread) in December and rose by around 35% & 25% respectively, against November, comparing monthly average, as per data maintained by SteelMint.

On an average, the required conversion is reported at INR 4,000/t, which hovered at INR 3,400-3,700/t in November & gained further to INR 4,500-4,700/t in December 2020.

Lessened supply by primary mills is the key factor behind active demand as well as a surge in prices of secondary mills wire rod.

The majority of primary mills were out of the market during this period as they were not in a position to take healthy orders of wire rod, resulting in a huge opportunity to secondary mills based in Central & Eastern regions.

The export market too contributed in good measure. As per SteelMint’s statistical data, wire rod supplies to Nepal from India increased over fivefold m-o-m in December with 34,000 t being exported. Close to 70% of this material is supplied by secondary mills.

Outlook:

Industry experts believe that the demand as well margins of secondary mills wire rod will stay strong in January as availability of wire rod remains a major concern despite floating higher price range.