Monthly Archives: November 2010

Spot prices in China up, Demand weak

Iron ore prices in China have been moving up for past few days and has touched a six months high. 63.5/63 being traded at $171/Mt primarily due to tighter supplies from Indian exporters and delayed Australian shipments.

Secondly due to news that Major miners Rio and Vale will increase contract prices by 4-5%. More over Chinese mills owner tend to pile up stock before winters as it becomes difficult to transport raw material.

“Buying is majorly seen from small mills, big mills have enough stock for next few months. Though prices are inching up due to tighter supplies but as such there is no aggressive buying from Chinese steel mills.We need to be cautious at these levels, as steel majors have kept their Dec steel prices unchanged, where as China steel, Taiwan’s largest mill  have reduced HRC prices by 5%” said a Chinese importer based in Beijing.

China Steel announced to cut its 2011 January&February quotation price, retroactive to December this year. HRC price was cut by ~US$32 per tonne (-5%) and the new quotation price is around US$620 (@USD/TWD 30.8, see table below for detail), lower than current China domestic spot US$645 but higher than East Asia import cfr US$605. We believe China Steel cut its price to secure customers and shipment, as its previous price was far too high above spot and downstreams have all been suffering

 

Sesa Goa to close mining operations at Orissa mine

Sesa Goa said on Tuesday it will stop mining operations at Thakurani mine in Orissa from Dec. 1 as it was unable to renew the mining contract on viable commercial terms on a long-term basis.

 

Sesa Goa started operating the Thakurani mine in 1999 under a 10-year contract that expired in June 2009. Since then, it has been operating the mine on short-term renewals, it said in a statement.

 

India: 45 furnaces in Raipur to shut down operations

Tuesday, November 30,

 

 

According to Chhattisgarh Mini Steel Plant Association, “45 Induction furnaces have decided to shut down operations from today 11.30 pm onwards.”

 

This move is to oppose higher raw material prices, heavy electricity charges and poor demand for finish goods

 

Earlier the Chhattisgarh Mini steel Association in a press conference had indicated for an indefinite strike w.e.f. 1st December and had appealed for reduction in electricity tariffs. 

 

 

Where as most of the induction furnaces based in Chattisgarh and Maharastra are either shut or running at low capacities due to poor conversion cost and high raw material prices.

 

Other steel associations based in Maharastra and South are planning to adopt the same policy in order to put pressure on govt and private iron ore miners to reduce iron ore prices.

 

Spot Iron Ore prices in China will go up further : Experts

Iron ore prices fixed by global miners Vale Group and Rio Tinto Group are expected to increase by 4 percent in the first quarter of 2011, according to estimates from Industry experts

Iron ore with a 61.5 percent ore content, and exported by Rio Tinto, is likely to be fixed at around $133.5 a ton (excluding freight) in the first quarter, up 4 percent from $128.8 a ton between the September-November period, following a formula, which is based on the average market price over the previous quarter, minus one month.

Meanwhile, iron ore with a 65.5 percent ore content, exported by Vale, will probably reach $139.5 a ton (excluding freight) in the first quarter, up 4 percent from $134 a ton, following the same formula. Meanwhile, BHP Billiton Ltd will wait for one month before calculating its price, said Rory MacDonald, head of Iron Ore Operations at The Steel Index.

“Delivered China spot iron ore prices stayed firm through the three months ending Tuesday, never falling below $138 a ton and climbing as high as $167 a ton, on consistent Chinese demand and supporting supply restrictions,” he said.

“A ban on iron ore exports from the state of Karnataka, India – 25 percent of the country’s exports – has been in force throughout the last three months,” said MacDonald

“But there will be limited room for Chinese steel mills to ramp up prices in the first quarter, as the winter season is a slack period for steel products. We’ve already seen a slowdown in the construction sector, which accounts for 45 percent of the steel consumption, as a result of cold weather,” he added.

Spot prices of imported iron ore remained near a six-and-a-half-month high on Monday, amid declining supplies from India, the world’s third largest ore exporter, which banned exports in July during a crackdown on illegal mining in southern Karnataka state.

Indian ore with a 63.5 percent ore content remained firm at $172 a ton (including freight) on Monday, after hitting a six-month peak last week.

Shanghai deformed steel prices hit a record high over six months at 4,540 yuan ($684) a ton on Nov 26, up from 4,450 yuan per ton a week ago, according to data from the independent observer, Mysteel.com.

Chinese steel prices will climb on inflationary pressures, but steelmakers will still be under operational pressure due to rising raw material costs, said Zhang Lin, a senior analyst from Beijing Lange Steel Information Research Center.

“Chinese steelmakers’ profits have been declining since April, when prices began to fall,” Luo Bingsheng, vice-chairman of the China Iron and Steel Association said at a conference on Friday.

“The average profit ratio of Chinese medium- and large-sized mills touched 2.58 percent for the first 10 months of this year, much lower than the average profitability of Chinese industries,” he said.

“Chinese steel mills will suffer the same slack situation from November to early 2011 the same as during September and October,” Luo said.

 

Source: China Daily

 

Steel prices seen moving upwards in short term: Experts

Driven by a strong domestic demand from the automobile, infrastructure and other allied sectors, steel prices are likely to increase by USD 25-30 (Rs 1,000 1,200) per tonne in the next three to four months, industry officials said.

Steel-makers feel that better international prices and increase in coking coal and iron ore prices would also lead to the metal’s price increasing. It is currently pegged at Rs 30,000 per tonne.

“We expect steel prices to firm-up in the coming months. In the next three to four months, prices may go up by another Rs 1,000 per tonne as domestic demand firms up. Prices of coking coal as well as input costs have risen,” a top official at Essar Steel said on condition of anonymity.

Costs of iron ore and coking coal have surged this year after miners moved to a quarterly pricing mechanism, thus affecting the margins of steel companies.

The growth in the auto sector is also directly affecting the steel prices.

Auto components-maker, Steel Strips and Wheels, that makes wheel rims for most of the global auto players such as Nissan, BMW, Audi, Toyota, GM, Honda, Tata Motors and Honda, is also contemplating a hike in steel prices.

“Prices will go up by USD 25-30 per tonne on the back of growth in the auto sector and rise in input costs by March-April,” Steel Strips and Wheels’ chief general manager, (Corporate and Raw Material), S Raghuvanshi, said.

Meanwhile, a senior official at Jindal Steel and Power also said that there is an upward pressure on steel prices and prices would harden further on the back of an increase in domestic consumption by 10 per cent

 

Source: Business Standard

 

Iron Ore-Prices hover at 6-1/2-month highs, firm demand

Monday, November 29,

 

 

Iron ore prices steadied near 6-1/2-month highs on Monday, supported by fewer Indian supplies and demand from Chinese steel mills.

 

The Steel Index 62 percent iron ore benchmark stood at $166.50 a tonne, cost and freight in China, on Friday, versus $166.40 in the previous session.

 

63.5 percent grade Indian fines are being offered at $170-$172/MT.

 

“Iron ore prices are still witnessing a mild increase,” said a trader in Rizhao in China’s eastern Shandong province. “Chinese mills are still building stocks ahead of the New Year and steel prices have been inching up.”

 

Despite China’s campaign to limit steel production from September to meet energy efficiency targets, crude steel output for the whole of 2010 was still expected to hit a record 624 million tonnes, CISA said last week, with apparent consumption up about 5.6 percent to 596 million tonnes.

 

“Iron ore is regaining its premium commodity status, rebounding strongly over the past couple of months as confidence returns to the Chinese steel market,” ANZ said in its November report.

 

An ongoing ban on iron ore exports from the southern Karnataka state in India also kept supplies of high-grade material limited, traders said. India’s Supreme Court on Friday issued notices to the Karnataka state government asking why it must not admit an appeal by a miner that challenged the ban.

 

Prices of forward swaps cleared by the Singapore Exchange eased modestly, with the December contract slipping 33 cents to $161.67 a tonne and January was down by 75 cents at $157.33, February eased 33 cents to $156 and March also dipped 33 cents to $154.67.

 

Source: Reuters

 

 

Spot iron ore prices in China gains momentum

Saturday, November 27,

 

 

CNF prices touched $169/MT for Fe 63.5 of Indian cargo, where as exporters were quoting higher and expected prices to be around $172-174/MT. But there were no deals concluded on such higher prices.

 

Reasons for higher prices:-

 

·         Increasing spot prices from Brazil and Australia

 

·         Anticipated rise in contract prices for Iron ore in Jan Quarter by Rio and BHP

 

·         Stocking of raw material before winters

 

Limited supply from India and Australia might have also lead to such rise in prices. Exports from India fell by 30% in month of Oct and exports from Australia also noticed a significant decline

 

Spot iron ore prices in China steady for now, contract prices likely to go up in Jan 2011

Friday, November 26,

 

 

Spot iron ore prices remained unchanged with buying interest not so strong

 

Sesa Goa sold its 63.5/63 cargo at 169.50 CFR China this week

 

Iron ore contract prices might go up by 7% in the first quarter of 2011. Contract prices almost doubled in the April quarter and gained more than 20 percent in the July-to-September period before falling 13 percent in September-to-November.

 

“Steelmakers will face pressure from higher costs and eroding profits in the first quarter,”said, Xu Xiangchun, chief analyst with Mysteel Research Institute. As a result steelmakers in China might feel the need to raise prices in order to pass on higher raw-material costs as demand slows in winter.

 

 

 

Supreme Court issues notice to Karnataka on iron ore export ban

Saturday, November 27,

 

 

The Supreme Court on Friday sought the Karnataka government’s response to the Karnataka High Court’s judgment upholding the ban on transport and export of iron ore from the State.

 

A Bench of Justices R.V. Raveendran and A.K. Patnaik issued notice to the State and other respondents on a special leave petition filed by MSPL Ltd. against the November 19 judgment.

 

Even as counsel for appellant E.R. Kumar submitted that the company was legally operating mines and sought some relief, the Bench said it would issue notice and hear the matter after the response was filed.

 

The company said 6,42,706 tonnes of iron ore was lying unutilized on its premises because of the government’s refusal to issue a mineral dispatch permit. “It is a reputed company engaged in the mining and export of iron ore and is registered as an export-oriented unit,” counsel said.

 

The SLP contended that the Mines and Minerals Development and Regulation (MMDR) Act “does not vest any power with the State government to impose a complete prohibition or ban on the mining, transport or storage of minerals.

 

The only power of the State government, even under the Act, is at best to frame rules to create a machinery to detect and prevent illegal mining, transport and storage of minerals in individual cases.”

 

It would be anomalous to interpret the power to frame rules to prevent illegal mining as conferring power on the State government to nullify Parliament’s objective of ensuring integrated development of the nation’s mineral resources by imposing a blanket ban on iron ore exports.

 

In exercise of its rule-making power, the State could not issue an export ban order, the petition said, praying for quashing the judgment and an interim stay of its operation until the SLP was disposed of.

 

Source: The Hindu