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Vietnam imported scrap

Vietnam: Imported scrap market quiet on lockdown, offers fall

Vietnam’s imported scrap trade activities have slowed down due to lower domestic consumption and limited demand owing to Covid restrictions. High steel prices have also considerably dented the country’s developmental spree, stalling several major infra projects.

Bulk imported scrap offers for Japanese H2 scrap are at $485-495/t CFR Vietnam basis, lower by $10 w-o-w. The US-origin bulk scrap offers are mostly absent and no firm offers/deals were reported, sources informed to SteelMint.

Vietnam ferrous scrap imports rise 23% in H1CY’21: Vietnam’s ferrous scrap imports were recorded at 3.05 million tonnes (mn t) in H1CY’21 (Jan-Jun’21), an increase of 23% y-o-y vis-a vis 2.48 mn t in Jan-Jun’20. Japan was the largest supplier at 1.43 mn t followed by the US at 0.8 mn t in this period. Ferrous scrap imports rose on the back of strong steel demand and a rise in steel output.

Vietnam market highlights:

  • Domestic scrap prices likely to go up: Domestic scrap prices more-or-less remained unchanged against the preceding week at VND 11,200/Kg ($486) and VND 10,900/Kg ($473) for H1 and H2 respectively. However, due to limited scrap availability in the domestic market, some scrap traders may raise offers to VND 11,600/Kg ($505) for the H1 grade, Vietnam-based local sources informed SteelMint.

Notably, due to the continuous hike in the number of Covid cases, Vietnam’s two major cities Hanoi and Ho Chi Minh are under strict lockdown, causing transportation and logistics hurdles. Currently, construction sites are closed and waiting for further instructions from local authorities, SteelMint learnt from a reliable market source. Domestic rebar offers are now at VND 15,900-16,000/Kg exw basis.

  • Vietnam mills active in billet exports: Vietnam’s mills remained active in the exports market goaded by a dull domestic demand. According to SteelMint’s sources, BF-route offers from Vietnam were at $700/t CFR Manila. With domestic sales turning dull in Vietnam owing to Covid restrictions, the mills are likely to remain active in exports.

Early last week, deals of IF-route billets were reported at $690/t CFR the Philippines.

The Vietnam government has proposed an export duty of 5% on billets exports last week, intending to ease domestic steel prices. In the latest update received, the Vietnam Steel Association (VSA) has petitioned the government against the imposition of the export tax.

South East Asia Market highlights: 

  • Indonesia scrap market quiet on lockdown: The Covid situation in Indonesia has yet to normalise. Many mills were forced to close. Due to a dull domestic market, and slow steel consumption there were no active bookings last week, said a market source.
  • Thailand’s imported scrap deals limited: Imported scrap trade into Thailand remained limited, as offers continue to move up as HMS 1&2 (70:30) is now available at $435/t CFR basis, while last week HMS 1&2 (80:20) was recorded at $425/t CFR levels, sources confirmed to SteelMint.
  • Imported scrap prices into Taiwan fall further: Imported scrap prices into Taiwan fell further, while trade continued to decline. Bids for HMS 1&2 (80:20) were recorded at $450/t CFR Kaohsiung levels, last week but which have now come down to $442-445/t CFR levels.
 

India: Australian thermal coal stuck at China ports get Indian buyers

CoalMint’s vessel update reveals that, between 13-17 Jul’21, three thermal coal vessels with a combined quantity of 0.20 million tonnes (mn t) from China are set to arrive at Indian ports of Dahej, Bhavnagar and Ennore.

China is a net importer of thermal coal and is dealing with shortage due to increased power demand in hotter-than-usual summer season.

However, probing further, CoalMint learned from participants that the vessels arriving from China are Australian thermal coal cargoes that were stuck at the Chinese ports for a long time amidst the ban and have been subsequently bought by Indian buyers at reasonable rates.

Australian thermal coal prices elevated

Australian thermal coal prices rose by 28% in Jun’21 amidst surging demand from Taiwan, Japan and South Korea ahead of the peak summer season. For August shipments, 5500 NAR Australian coal offers are heard at $85/tonne FoB Newcastle basis.

However, at these levels, Indian cement manufactures who had been the key importers of Australian coal till May’21, are now shying away from making any major bookings.

More so, around 0.36 mn t of Australian thermal coal is arriving at Indian ports between 8-18 Jul’21 with the highest quantity of 0.22 mn t coming for Adani Enterprise while the remaining is being bought by the players from the power and steel sectors, CoalMint’s vessel line-up reveals.

Outlook ahead

In the ongoing scenario where coal demand from the north east Asian countries remains high, liquefied natural gas (LNG) prices have escalated and there are supply concerns in Indonesia and South Africa. Hence, any chances of price correction seem unlikely in the near term.

 
OM holdings ferro silicon

Malaysia: OM holdings restart ferroalloys production at Sarawak plant

Malaysia-based OM Holdings Ltd has been granted approval by the Bintulu Division Disaster Management Committee to resume operations, as per latest reports. Operations have recommenced initially at four submerged arc furnaces, as part of a phased plan for ramping up production. The plant was operating at a rate of 12,000 t per month of ferro silicon and 18,000 t/month of silico manganese production before shutdown. It has 16 units in all of 25.5 MVA furnaces, of which 10 are earmarked for production of ferro silicon, while six units have been modified for the production of manganese alloys.

 
Vedanta Ferro chrome auctions

India: Vedanta ferro chrome auction receives good response

Vedanta (FACOR) conducted an auction today for 1,500 t of ferro chrome. The entire quantity on offer received bids, as per SteelMint reports. As most of the major producers don’t have much material to offer in the domestic market, the auction witnessed aggressive bidding. It fetched prices which stand at a level similar to those prevailing in the domestic market. Current prices for HC ferro chrome are at INR 104,000/t, ex-Jajpur.

 

India’s State-wise Iron Ore Dispatches in FY21

Iron ore dispatches from India’s largest producing state, Odisha, decreased by 40.22%, to 53.25 mn t in FY21 from 89.08 mn t in FY20. On the other hand, Chhattisgarh’s share increased by 8.22% to 21.79 mn t in FY21 from 20.13 mn t in FY20. Karnataka’s share decreased by 8.45%, to 27.35 mn t in FY21 from 29.87 mn t in FY20, while Jharkhand’s also dropped by 62.83%, to 1.43 mn t in FY21 from 3.84 mn t in FY20.

 

India: Odisha’s Directorate of Mines seeks clarity on calculation of shortfall in dispatches

Odisha’s Directorate of Mines has sought a clarification from the state government’s Department of Steel and Mines about the commencement of assessment to measure shortfall in mineral dispatches from the auctioned leases vis-a-vis the minimum dispatch requirement specified in the Mineral Concession Rule (MCR), 2016, SteelMint learnt from government sources.

Minimum dispatch requirement

The MCR, amended on 10 Jun’21, will come into effect from 1 Jul’21. The amended MCR stipulates that for mining leases that were executed on or before the commencement of the Mineral Concession (Third Amendment) Rule, 2021 the assessment of shortfall in dispatches shall apply after one year from the date of execution of mining lease or the date of commencement of the MCR (Third Amendment) 2021, whichever is later.

Out of 19 auctioned leases for which lease deeds were executed before the MCR (Third Amendment), 11 leases were executed during Jun’20 and are completing one year before 1Jul’21. These include four iron ore leases of JSW Steel as well as leases awarded to AM/NS India and merchant miner Serajuddin and Co. among others.

The Directorate has asked for clarification on whether the assessment of shortfall under rule 12(A) of MCR would be made on the date of completion of one year from the date of lease execution or the date of the commencement of the amended rule, which is 1 Jul’21.

Authorities seek to ensure compliance

Rule 12A (1A) of the MCR (Third Amendment) specifies that in case of any shortfall in dispatch in view of the minimum dispatch requirement, which shall be assessed on a quarterly basis, the lessee shall pay the amounts payable under rule 13 of the Mineral (Auction) Rules, 2015 for the actual dispatch.

In addition, the lessee has to pay the difference between the amount that would have been payable for the quantity that is stipulated as the minimum dispatch requirement in a particular quarter (on the basis of the weighted average of the grade of mineral dispatched during the quarter) and the amount paid on the basis of the actual dispatch in that quarter under rule 13 of the Mineral (Auction) Rules.

SteelMint earlier reported that Odisha’s Directorate of Mines is keeping tabs on the actual dispatch volumes from the auctioned leases. The state government has also sought compliance from the new lessees on critical issues pertaining to irregularities with stacking at the auctioned leaseholds. These issues surfaced after the regulatory authorities discovered that some new lessees were falling short of dispatching permitted volumes resulting in stockpiling of minerals and ore at mine sites.

 

Bhutan: Ferro silicon offers increase further by INR 5,000/t w-o-w

Bhutan’s ferro silicon producers increased their offers by INR 5,000/tonne (t) to INR 120,00/t last week. Soon after this, they got overbooked within a day and closed sales at these prices. However, a few producers are accepting orders for very small lots at higher levels. Most producers in Bhutan are reluctant to take bulk orders due to supply shortages. Some small deals were concluded from Bhutan at around INR 125,000/t this week, while the offers have been increased to up to INR $130,000/t.

On the other hand, Guwahati producers are quoting higher prices for ready shipments. These prices are much higher than Bhutan’s. This is because the Guwahati producers are at an advantage with international prices going up while the Bhutan market is falling behind due to supply issues. Currently, Guwahati producers are also quoting up to INR 140,000/t, and they expect prices to go up further with Chinese prices increasing.

Malaysia is the major ferro silicon market for Indian importers. However, with their largest ferro silicon producer, OM Holdings, suspending operations, supply is tight in the country. Guwahati is the only source for ready deliveries now. Due to the tight supply-demand dynamics, buyers and traders are shifting towards the Chinese market to procure the material. However, due to production cuts in the Ningxia region, Chinese offers increased to around $1,790/t for the grade 72% and $1,820/t for the grade 75%.

Outlook

Indian producers are full with domestic orders and are not catering to exports currently. It is expected that prices in Bhutan would further increase in the coming week as enquiries remain on the higher side.

 

 
Power Sales at IEX

India: Short-term electricity sales at IEX down 15% in May ’21

The Indian Energy Exchange (IEX) traded 6,540 MU of electricity volume in May ’21 recording a fall of 15% m-o-m compared with 7,707 MU in Apr, amidst continuation of Covid restrictions as well as cyclonic disturbances. Besides, surplus power availability in difficult market conditions negatively impacted prices in the day-ahead market which saw a steep fall of 24% on a monthly basis to INR 2.83/unit in May ’21.

 
Power Plant Coal Imports

India: Govt allows flexible coal usage to reduce power generation cost

Taking a consumer-friendly initiative for the benefit of electricity consumers, the government has permitted state governments to transfer domestic coal linkages of one power station to another in order to induce cost reduction in power generation.

Under the provision, the linkage can only be transferred to those plants which have been established through a bidding process under the guidelines issued by the power ministry based on the net heat rate. The process requires ensuring that the concerned plant is more cost efficient and the power generated from such plants is supplied to the state itself.

The entire savings due to the flexible use of such linkages would be automatically passed on to the power distributing companies and ultimately to the consumers. Besides, this would help in reducing coal imports as well as in carbon emissions as the coal will be used in the more efficient power plants with lower station heat rate.

At present, consumers in Punjab, Haryana and Uttar Pradesh will benefit from this provision, with the expected savings in Punjab alone estimated to be around INR 300 crore annually, as per the power ministry.

Imports on the rise again on spurt in electricity demand

Coal imports by the power plants had fallen by 34% year-on-year (y-o-y) to 45.47 mn t in FY ’21 compared to 69.22 mn t in FY ’20 in view of the contraction in power demand.

However, with a surge in power demand, imports have witnessed a steep rise of 25% y-o-y to 4.28 mn t in Apr ’21, as per the data provided by the Central Electricity Authority (CEA).

While the government is determined to bring down the level of imported coal for blending purposes to ‘zero’ , a volume of 0.85 mn t was imported for blending purposes during the month in addition to volumes imported by plants which are designed to run on imported coal.

In order to attain its long-term goal, the government has taken a series of measures to supply coal to reduce dependence on imports.

First, Coal India Ltd (CIL) has decided to continue with the supply of coal to the power plants under the import substitution scheme in the ongoing fiscal whereby power utilities desirous of procuring domestic coal in lieu of imported coal have been asked to submit their requirements.

Additionally, the coal miner has extended the trigger level to 80% under the fuel supply agreement (FSA) route for power plants to encourage them to purchase higher volumes of domestic coal.