Offers for Chinese wire rod have fallen by nearly USD 5/MT W-o-W. Current offers are at around USD 310/MT CFR Mumbai for chrome added wire rod for November shipments.
It is being noticed that importers are finding imported wire rod offers to be very attractive as the price gap which earlier used to be around INR 2,500-3,000/MT between domestic and imported wire rod has widened. The price gap at present is approximately INR 4500/MT. As such, the profit margin on imported wire rod is tempting the importers.
The cost of 6.5 mm imported wire rod at USD 310/MT CFR is equivalent to about INR 28,300/MT (see table below), while material of 8 mm is being offered by SAIL at around INR 33,000/MT (FOR price).
Wire rod imports to India increased by more than 40% in Aug’15 as compared to Jul’15 due to widening of price gap between domestic and imported wire rod. The total quantity imported in Aug’15 was approximately 0.12 MnT (including alloy and non alloy wire).
The price of imported Chinese wire rod has been continuously declining due to weak Chinese local demand. Offers are not expected to improve in the forthcoming week due to China’s week long national holiday from Oct 1-7. However, Indian secondary wire rod price showed some improvement, as MS billet prices increased post implementation of safeguard duty on HR Coil.
On 7 Nov’14, India imposed BIS quality norms on rebar. However, BIS was not applicable on wire rod imports. A quality control order was issued in 2015, according to which, only those Chinese mills would export material to India who have the BIS licence. The order is still not imposed, but if this gets imposed on wire rods (IS 7887), the increasing imports would come to a halt and the domestic market participants would reap the benefits.
Approximate cost of imports:
| PRICES | ||
| Particulars | IN USD | IN INR |
| Cost of Material (in USD) | 310 | 20,510 |
| Import duty @ 10% | 31 | 2,050 |
| Port handling charges | 7.5 | 500 |
| CVD @ 12.5% | 43.5 | 2,883 |
| SAD @ 4% | 15.6 | 1,038 |
| VAT @ 5% | 20.3 | 1,349 |
| Total Cost of Imports | 428.2 | 28,330 |
| Current FOR Punjab prices for 8 mm wire rod | 498.7 | 33,000 |
| Price Difference (Domestic-Imported) |
70.5 |
4,670 |
1 USD = INR 66.16
*Data for Sep till 12 Sep
Global wire rod prices
|
Region |
USD/MT |
W-o-W Change |
| China export (FOB main port) | 293 | -5 |
| CIS export (FOB Black Sea) | 338 | -14 |
| South East Asia (CFR) | 305 | -3 |
Prices in USD/MT
Source: Steelmint Research
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