Steel wire prices have dropped by 20 per cent in last weeks on account of lower demand, said B L Jajodia, the newly elected chairman of Steel Wire Manufacturers Association of India (SWMAI).

Prices at Rs 55,000-60,000 a ton, a month and a half back were now at Rs 45,000-50,000 a ton.

The export duty had further aggravated the situation.

Exports last year had dropped to 73,000 tons from 0.3 million tons in the previous year.

This year, exports were likely to be around one million ton.

Addressing the annual general meeting, Jajodia urged the government that the export duty on steel wire should be abolished with immediate effect to enable the wire industry to be globally competitive.

He also demanded that the customs duty on raw material for the industry, i.e. wire rods, should continue to be zero per cent to enable the steel wire industry to get raw materials at the globally competitive rates for making value addition on it and cater to the domestic and international market demands for steel wires.

Jajodia added that the recession in the steel industry forced secondary steel producers to reduce their prices but the main producers had not yet responded to that trend and price of mild steel and high carbon wire rods offered by the two main producers—Tata Steel and RINL—were at the peak level as it was before the crunch.

Tata Consultancy Services Ltd. and Wipro Ltd., India’s biggest and third-biggest software services providers, will announce earnings this week, probably joining their rivals in reporting higher profits.

Mumbai-based Tata Consultancy and Bangalore-based Wipro are scheduled to announce earnings for the quarter through September on Oct. 22. Reliance Industries Ltd., India’s biggest company and Tata Steel Ltd., the nation’s biggest steel producer, will announce earnings on Oct. 23 and Oct. 24 respectively.

Tata Consultancy may report this week second-quarter profit rose to 13.6 billion rupees ($278 million) from 12.5 billion rupees a year earlier, while sales climbed 20 percent to 68.9 billion rupees, a Bloomberg News survey of analysts showed.

Wipro may report net income grew 12 percent to 9.10 billion rupees in the three months to September, while sales gained 33 percent to 62.9 billion rupees.

Infosys Technologies Ltd., India’s largest computer-service provider by market value, said last week a slump in orders from financial clients may spread to retail and manufacturing customers.

Reliance Industries may say net profit rose 6.8 percent to 41 billion rupees, while sales climbed 31 percent to 421.1 billion rupees.

Tata Steel may say profit rose 39 percent to 16.5 billion rupees, while sales rose to 64.1 billion rupees from 47.9 billion rupees a year earlier.

Monetary Policy

Tata Steel and its domestic rivals won’t increase prices for six months or cut output should the government impose an import tax and scrap levies on exports of the metal. The producers are seeking 15 percent import duty and scrapping of the export levy as demand weakens, Minister Ram Vilas Paswan told reporters after meeting executives in New Delhi on Oct. 17.

Central bank Governor Duvvuri Subbarao will announce the quarterly monetary policy in Mumbai on Oct. 24. The Reserve Bank of India on Oct. 15 reduced the amount of deposits lenders must set aside as reserves for the second time in a week and eased restrictions on lending to banks. It cut the so-called cash reserve ratio to 6.5 percent from 7.5 percent. The bank had lowered the cash ratio by 150 basis points on Oct. 11, the steepest cut since 2001.

Goldman Sachs Group Inc. reduced India’s growth forecast in the year ending March 2009 to 7.5 percent from 7.8 percent and in the following 12 months to 7 percent from 7.2 percent, saying the global financial crisis will impact the $1.2 trillion economy. The IMF said India’s economy may slow to 7.9 percent in 2008 and slide further to 6.9 percent in 2009.

As many as 25,000 workers at the Reserve Bank of India’s 20 offices across the country plan to stay away from work on Oct. 21 to demand higher pension, according to the United Forum of Reserve Bank Officers and Employees’ Association. The central bank said the employees strike is “illegal,” and may cause some disruption to payment and settlement systems.

Currency, Bonds

The rupee last week fell to a six-year low as the nation’s benchmark equity index slid below 10,000 for the first time since June 2006, stoking concern capital outflows will quicken. The currency completed a 10th weekly loss on concern measures taken by global central banks and governments won’t be enough to stave off the credit crisis.

The rupee weakened 0.8 percent last week to 48.8825 a dollar in Mumbai, according to data compiled by Bloomberg. That is the lowest since June 2002.

India’s government bonds completed their third weekly gain as crude oil more than halved from the July peak, spurring optimism inflation will cool. The yield on the benchmark 8.24 percent note due April 2018 dropped 8 basis points last week to 7.72 percent in Mumbai, according to the central bank’s trading system. A basis point is 0.01 percentage point.

Selling Streak

Indian stocks fell on speculation overseas funds faced with redemption are selling the nation’s equities.

The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 606.14, or 5.7 percent, to 9,975.35. The benchmark posted its fourth weekly decline, dropping 5.3 percent.

Overseas investors sold Indian equities for nine straight days, the longest streak of net sales since the 14 days ended June 1, 2006. Sales exceeded purchases by a record $11.2 billion, according to the nation’s stock market regulator.

Indian mild steel ingot futures may pull back this week on bargain buying, but a global slump in demand and fall in freight rates may weigh, analysts said.

“Market remains weak but some pull-back is expected …,” said Vamsi Krishna Kona, an analyst with Karvy Comtrade Ltd.

Fundamentals at the global level continue to remain weak with large steel makers cutting output and a fall in demand from commodity guzzler China. See [ID:nL879620]

Ocean freight rates fell to their lowest level in 28 months on Thursday.

The London Baltic Exchange’s dry sea freight index .BADI, used by economists to predict global growth cycles, suffered one of its biggest one-day falls in its 23-year history last Thursday.

Analysts said India’s domestic demand will now have major bearing on the steel prices. Government officials have indicated a robust demand from the infrastructure development being undertaken on a large scale in the country.

Steel production is expected to rise 6 percent in the year to March 2009 and demand is seen growing around 12 percent. India aims to raise production to 124 million tonnes by 2012 from 58.64 million tonnes currently.

India, the world’s fifth largest steel producer, has kept a constant watch on steel and iron ore prices, occasionally indicating possible intervention in case of a spike.

Technically analysts expect gains for the most-active November futures NSTX8 this week largely on bargain buying after losing 14 percent in the period from Oct.1 to Oct. 11.

Mild steel ingot futures on NCDEX is the most traded product in the ferrous metal category in India.

Commodity brokerage Motilal Oswal suggested buying at 24,000/23,600 rupees per tonne with a stop loss of 22,900 rupees and a target of 26,600/25,700 rupees for the November contract.

Brokerage Karvy Comtrade expected a range of trade between 22,500 rupees per tonne and 24,500 rupees.

Another Mumbai-based brokerage suggested a range between 24,000 rupees and 26,750 rupees

The Financial Express without saying where it obtained the information reported that Indian steelmakers may cut prices and reduce output as demand declines.
 
 The report cited Mr Seshagiri Rao finance director of JSW Steel Ltd as saying that “Production growth in the Indian steel industry is likely to decline to about 9% from as much as 13% because of a global economic slowdown.”
 
 The report said that Indian consumers have begun importing from countries such as China and Ukraine as global steel prices have fallen by about USD 350 per tonne in the last couple of months.
 
 According to Mr Rao, Indian companies will have to reduce prices because the local market will be flooded with cheaper imports.