Monthly Archives: October 2010

China steel prices remain flat as traders await new policies

Saturday, October 30,

 

 

Steel prices on the Chinese market remained unchanged for the second consecutive week, with transactions still relatively low as traders anticipate possible policy changes in the remaining months of the year.

 

Construction steel on the Shanghai market remained at 4,170 yuan ($624.2) per tonne on Thursday, with end-user demand still weak and traders wondering if China might impose more restrictions on the sector before the year is out.

 

“The market is just slow right now because of the uncertainties there have been so many different policies this year and who knows what the government will announce in the next few weeks?” said a manager at a steel trading company in Beijing.

 

“Any new policy to cut electricity use could cause a bit of panic and send some prices rising,” she said.

 

According to China’s National Business Daily, mills in Hebei are facing more restrictions on electricity use in the last week of October as the province strives to meet its October consumption target.

 

While another round of enforced capacity closures could help prop up prices, no one expects any sharp increases as the winter approaches and construction activities come to a halt, especially in northern China.

 

But the problems could be more than seasonal, a senior analyst with a foreign investment bank said.

 

Source: Reuters

 

 

POSCO to raise stainless November steel prices

Saturday, October 30,

 

 

South Korea’s POSCO , the world’s No.3 steelmaker, said on Thursday it would raise prices of its major stainless products for a third straight month on rising raw material costs.

 

The company said November prices of hot-rolled stainless steel products would rise by 100,000 won, or 2.7 percent, per tonne to 3.8 million won ($3,363) from October.

 

Shares in POSCO ended down 1.27 percent on Thursday versus a 0.1 percent fall in the wider market.

 

 

 

Sponge Pellets: a new revolution in Indian steel industry

Friday, October 29,

SteelMint Exclusive

 

 

Chhattisgarh MSP (Mini Steel Plant) association organized a technical seminar on Pelletization in Raipur. The motive behind the seminar was to promote the new technology to produce Sponge pellets by using Iron ore fines.

 

China is one of the major countries which makes use of Sponge pellets as it has limited access to use Iron ore lumps; fines are being imported by Chinese mills from India, Brazil and Australia.

 

The rising cost of Iron ore lumps in India has made the manufactures switch to a new technology that uses Iron ore fines which is available in plenty and mainly exported to China currently.

 

Industry speakers discussed intently on the pros and cons of using the new technology. Mr. B.L. Agrawal, Director, GPIL said, “The use of Sponge pellets will help is reducing the power usage and will increase the efficiency of the plants by almost 10%. Ingot manufactures will be able to reduce their prices by around` 2,200/MT. The amount of slag will also be reduced”. Commenting on the present steel market, Mr. Agrawal added, “revival in demand is expected post Diwali”.

 

Representatives from JSPL, Raigarh being a pioneer user of this technology, also presented the benefits that can accrue to Mini Steel plants when using Sponge Pellets.

 

Being a better technology it is believed that Sponge Pellets is a clear substitute for Sponge iron. It will be interesting to see if it will totally replace Sponge iron owing to such high cost of size ore. Some speakers also differed in their opinion and believed that the new technology will be only beneficial to Arch furnaces and not the Induction furnaces.

 

Such discussion forums/initiatives indicate the magnitude of the issue – high domestic iron ore prices and strength of the association who wants to bring out solutions collectively.

 

Impact on Iron ore fines

 

Currently, Iron ore fines prices are entirely based on the demand from the export market, mainly China. But, with increased usage of technologies like Sponge Pellets, there will be a boost in demand for iron ore fines also in the domestic market. This might lead to an increase in fines prices as domestic consumption also expands going forward.

 

 

Steel markets look better post Diwali – B.L. Agrawal

October 29, Friday

SteelMint Exclusive

 

 

On friday afternoon in Chhattisgarh Steel Association, attended by industry experts. Key note given by Mr B.L. Agrawal, Director, Godawari Power Industries Ltd, Raipur. Mr. Agrawal said demand looks better post Diwali.

 

 

The rising cost of Iron ore lumps in India has made the manufacturers switch to a new technology that uses Iron ore fines which is available in plenty and mainly exported to China currently.

 

 

Industry speakers discussed intently on the pros and cons of using the new technology. Mr. B.L. Agrawal, Director, GPIL said, “The use of Sponge Pellets will help in reducing the power usage and will increase the efficiency of the plants by almost 10%. Ingot manufactures will be able to reduce their prices by around` 2,200/MT. The amount of slag will also be reduced”. Commenting on the present steel market, Mr. Agrawal added, “revival in demand is expected post Diwali”.

 

 

He repeatedly brought out the benefits of using Sponge Pellets over Sponge Iron owing to the issues and cost of size ore in India. He also highlighted the benefits of the new technology while speaking at the seminar.

 

 

Representatives from JSPL, Raigarh being a pioneer user of this technology, also presented the benefits that can accrue to Mini Steel plants when using Sponge Pellets.

 

 


 

"Demand weak; though tighter supplies of iron ore keep prices steady"- Chinese Importers

Spot Iron ore prices in China ranged from $156-157/Mt for 63.5 Fe cargo, but there were handful deals concluded according to the market participants.

 

 

“Demand for iron ore remains weak on account of power cut and sluggish demand for steel. But prices of iron ore are steady for last two weeks as supplies of Indian iron ore remains tight.” Said a local trader based in Shanghai.

 

 

Iron ore prices were likely to slip further on Friday on thinner Chinese buying interest but should not be far off current levels on firmer steel prices and tighter supplies of higher-grade ore.

 

 

 The index, based on spot prices in China, has fallen just 2 percent over the past two weeks after touching near five-month highs in early October.

 

 

 Analysts and traders say continuing steel production cuts in other parts of China has had little impact on the outlook for iron ore demand due to expectations other steel mills may not be through with building stocks ahead of winter, suggesting ore prices may still recover.

 

 

 Tighter supplies of Indian ore with iron content of more than 60 percent have also kept prices of the raw material resilient; along with firmer rebar futures in Shanghai.

 

 

Steelmakers across the world have said soft demand will continue through the end of 2010 as government stimulus measures fade with both companies and consumers still hesitant to boost spending given mixed signals on the state of the global economy.

 

 

 

India: Steel market outlook looks hazy with mixed views on future price movements

Friday, October 29,

SteelMint Exclusive

 

 

Steel futures gain some momentum since morning but buyers still cautious, demand remains weak in the physical market. Mixed reaction seen in the market, few believe that markets have bottomed out and further reduction in steel prices is unlikely to happen.

 

“I think prices have bottomed out, though demand is weak, but steel prices below these levels are unjustified looking at high input costs like iron ore, coal and scrap.” said an Induction manufacturer based in Raigarh.

 

Whereas few feel that demand remains weak across country and looking at Chinese markets, they are not encouraging as well. Many secondary steel makers feel that November will be month to watch for, some of them are expecting price cut by iron ore miners and some are expecting price cut by major steel players in India.

 

“Steel prices are volatile, but matter of fact is demand is weak. Steel prices are only supported by good demand. We are expecting a price cut by Iron ore mines based in Orissa, as they are too high and not complementing sponge iron ore prices. More over we are also expecting a price cut by major steel makers in India on account of poor demand and piling up of stock” said a steel manufacturer based in Maharashtra.

 

 

 

Spot Iron ore prices in China stable; but trading on thin volumes

October 28,

Steelmakers across the world have said soft demand will continue through the end of 2010 as government stimulus
measures fade and both companies and consumers still hesitant to boost spending given mixed signals on the state of the
global economy.

Iron ore prices in China remained at $156/157/Mt levels, though not much of the action taking place in the market.

 

Iron ore prices steadied as offers held in place on Thursday on thin demand from Chinese steel mills as production curbs continue.
 

Adani wins bid to develop, mine Orissa coal block

Thursday, Ocober 28,

 

 

Adani Enterprises Ltd (AEL) has been selected as mine developer and operator (MDO) for the development and operation of the Chendipada coal block in Orissa, through global competitive bidding.

 

The block has an annual mining capacity of 40 million tonnes per annum (MTPA). The coal production will commence within 42-48 months’ time from these mines.

 

The Union Ministry of Coal had allotted the Chendipada coal block in Talcher coalfield, Orissa, with reserves of about 1600 million tonnes jointly to Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd. (UPRVUNL), Chhattisgarh Mineral Development Corporation Ltd. (CMDC) and Maharashtra State Power Generation Company Ltd. (Mahagenco) for captive mining of coal.

 

The Adanis will undertake development and operation of the coal block, which includes land acquisition, relief and rehabilitation (R&R), preparation of mine plan, approvals and clearances, coal mining, setting up of coal washery, establishing railway siding and deliver washed coal to the end-user at the designated power stations in UP, Chhattisgarh and Maharashtra.

 

With this achievement, AEL has a total of 110 MTPA of coal mining contracts in India making it one of the largest mining companies in private sector.

 

Source: The Business Line

 

 

India: Rising prices of Iron ore- a major concern for steelmakers

Thursday, October 28,

 

 

Several secondary steel producers across the country, covering sponge iron units, mini steel plants and rolling mills, are trying to regroup themselves to form an organization at the national level to take up issue of rationalization of iron ore prices.

 

According to Mr Anil Nachrani, President of the Chhattisgarh Sponge Iron Manufacturers Association,  “Since 2006-07, the prices of iron ore increased nearly 400 per cent, from Rs 1,200 to Rs 6,000 a tonne, while during the same period the steel prices increased by 17.63 per cent , from Rs 22,953 to Rs 27,000 a tonne”.

 

The State Govt. has no control over the private mine-owners as result they are free to decide their own prices, he added.

 

The secondary steel producers are finding it hard to operate at such higher input costs and squeezed margins. Already some units had pulled down shutters and many more would follow suit unless something was done urgently about the iron ore prices.

 

Now it will be interesting to see how the Union Govt. responds to this news because the current situation cannot continue for an indefinite period.

 

Source: The Business Line

 

 

 

 

"Liquidity a major concern for Steel Market- Manufacturers"

Thursday, October 28,

SteelMint Exclusive

 

 India Long product market hoped to make a comeback in the beginning of October with a price hike of Rs1000-1500/MT. But all hopes were shattered as market failed to absorb such price hikes and demand remained perennially low.

 

 

Market yesterday noticed a sharp fall and looked deserted with buyers almost nil. Market participants claimed for fewer enquiries yet sales remained low.

 

 

Manufacturers claim that, the tightening of credit along with shortage of labour are few reasons behind the current down fall apart from the obvious reason of festive season.Most of them feel that liquidity remains a major problem.

 

 

Key factors affecting liquidity in the market :

 

 

1) High Input Cost

2) High Lead Time

3) High Conversion Cost and thin profit margins

4) Weak demand

 

 

“We need funds to keep our production intact. High input cost, high work in progress ;leaves us with no other option but to cut prices and get the funds”  said Re-bar manufacturer based in Raipur, Chhattisgarh.

 

 

The intensity of the downfall has left market players in havoc. And it would not be surprising if prices go down further.

 

 

So for now, it would be advisable to wait and see until market exhibits a sustainable positive outlook.

 

Reported by Monica Patnaik (monica.patnaik@steelmint.com)