Monthly Archives: November 2011

Indian Ship breaking industry to boom in coming years- CRISIL

Ship owners are a worried a lot today as a depressed freight
market has been taking a toll on their earnings for the last almost two years
now. But players at the other end of the business – ship breaking – are
increasingly cashing in on the shipping industry downturn.

The global slowdown in trade & reduction in freight
rates makes it a boom time for ship breakers, especially when prices of steel
scrap are moving up, as it is happening at present.

“Increasing global shipping capacities against a backdrop of
weakening in economy will lead to a surge in ship breaking activity in the next
couple of years. India's ship breakers will acquire a larger market share
globally, supported by favorable demand for steel scrap and limited competition
from neighboring markets,” a report by CRISIL says.

Crisil estimates that of the 180 million GT of global
shipping capacities over 20 years old, about 55 million GT will come to the
breaking yards in the next two years.

The global market share of India's ship breaking industry,
located at Alang in Gujarat, is expected to grow to 40-45 per cent in the next
two years, from 35 per cent in 2010.

Legal restrictions on ship breaking in Bangladesh and
China's higher ship breaking costs are expected to help Indian players.


Spot power rates move up on short supply of Coal

Coal shortage is beginning to
reflect in the spot electricity rates, which have risen steadily to an average
of around Rs 5 per unit in the Southern region and close to Rs 4 per unit in
the rest of the country.

Tuesday's peak electricity rates
on the IEX, the country's largest power exchange were recorded at Rs 9 in the
South and close to Rs 6 in the other parts of the country, as coal supplies to
the sector, are slipping again after a mild recovery in the middle of last

Government estimates suggest a
cumulative generation loss of over 5 billion units during the first seven
months of the current fiscal. This was mainly on account of the inadequate
availability of coal, which is beginning to show up in the steadily climbing
spot power rates. Latest estimates released suggest that nine stations are left
with a day's stock or even less than that

Coal stock position has been
worst since the beginning of last month. While excessive rains in Coal India Ltd's
coal fields and workers' strike at Singareni Collieries were largely
responsible for triggering the recent coal shortage situation, law and order
problems in the Central Coalfields Ltd and Mahanadi Coalfields Ltd, inadequate
crushing capacity at mines and less transportation of coal from mines to
railway sidings have aggravated the problem.

The worsening fuel position comes
after a brief blip in the middle of last month, when coal stocks showed signs
of recovering at power stations. This was at a time when the Coal Ministry had
claimed that coal companies had been asked to step up dispatches to major
thermal stations.

Source: The Business Line


Offers for ferrous scrap to Turkey rise from last week

steel manufacturers expect demand to rise in coming weeks for finished products
from both international and domestic market. Thus, offers to Turkish mills for
ferrous scrap from US origin rise up by US$ 5-10/MT from last week.

At the
beginning of the week, Turkish mills booked more deep sea scrap cargoes at
higher prices than last week in order to replenish their stocks for the time
when demand for finished products is recovering, especially in the domestic

A cargo
of mixed material HMS (80:20) of around 11,000 MT and the same quantity of
shredded material was sold with an average price of US$ 429/MT CFR Turkey.

a US supplier also sold about 35,000 of HMS 1 & 2 (80:20) at US$ 427/MT and
5,000 MT of shredded scrap at US$ 432/MT CFR Turkey, up by US$ 5-10/MT from
last week.

However, offers to India for ferrous scrap corrected as suppliers have
cut their prices to attract more importers into the market. HMS (80:20) quoted
at US$ 430-435/MT and shredded scrap at US$ 440-450/MT CFR Nhava Sheva, Mumbai
i.e. down by US$ 5/MT from previous quote. Enquiries for the product have
increased from importers that have made exporters reduce their offers to close
some fresh deals.


A TMT plant in Raipur face threat of permanent closure;Is crisis deepening?

Over the last few quarters, steel manufacturing units have been joggling through a few issues such as expensive raw material, low steel demand, liquidity crunch etc, and all of it at the same time. In the last quarter, quite a few units have either closed down operations or been put up for sale.

A major steel plant in Raipur, manufacturing TMT bars faces threat of permanent closure. The TMT manufacturer has failed to pay its debt and is on the verge of closing down its business.

Based on industry data and sources, the TMT manufacturer had always tried to influence the market by pricing its Re-bar product in a very competitive way and offering at a discount of Rs 300-500/MT to the market price.

The manufacturer also had a different way of managing its cash conversion cycle with always buying the key raw material – Ingot on a credit period of 25 days and selling the finished material for cash on a regular basis.

Rise in input cost leading to low conversion ratio and poor off-take has badly hit the company's margins and revenues respectively and  it is being heard that the plant's director has taken a decision to shut down the plant permanently.


Indian Rupee falls further by 18 paise against Dollar

The rupee falls further by 18 paise to reach Rs 52.20 per US dollar on the month-end
despite of dollar weakness in the overseas markets.

The rupee resumed slightly lower at Rs 52.03/04 per dollar
on the Interbank Foreign Exchange, as against its previous close of Rs 52.02/03
per dollar, and dropped further to Rs 52.20 per dollar before quoting at Rs
52.17/18 per dollar at 10.15 a.m.

Persistent foreign capital outflows and month-end dollar
demand from importers, mainly oil refiners, affected the rupee value against
the dollar, a forex dealer said.


Spot Iron ore market remains dull; buyers prefer to stay out

Spot Iron ore market in China remained
dull with rates dropping to three-week lows. Most of the steelmakers preferred largely
to stay out of the market right now and wait for prices to fall further.

Offers for Fe 63.5/63 of Indian
fines stayed at $142-144/MT (CNF). Whereas, Australian Pilbara fines went down
a dollar to reach $131-$133/MT and Newman fines went down by $2 to reach

“Some traders are worried
that iron ore prices are very likely to fall further, So they have started
selling more at lower prices. But this isn't large-scale activity as the buying
remains weak, said an iron ore trader in China's eastern Shandong province.


ArcelorMittal's EU furnaces to face permanent shutdown- Citi  

European furnaces
temporarily closed by ArcelorMittal in response to poor demand are unlikely to
be fired back up again, say analysts at financial services supplier Citi.

Anindya Mohinta of Citi said, “We think all the plants shut
down temporarily will be permanent – Luxembourg, France and Spain will
definitely go”. 

In a earlier move to curb the poor demand, ArcelorMittal had
temporarily idled electric arc furnaces at Sestao and Madrid in Spain
and Schifflange in Luxembourg, and blast furnaces at Florange in
France, Eisenhüttenstadt in Germany and Dabrowa Górnicza in Poland. 

And further capacity closures are likely to be seen in
Europe, said analysts following. But opinion is divided over how soon this will
happen and whether the world’s biggest steelmaker or one of its competitors
will take action first. 


Government imposes anti-dumping duty on import of stainless steel HRC products

The Finance Ministry has imposed definitive anti-dumping
duty on imports of hot- rolled flat products of stainless steel from the
European Union, South Africa, US and Taiwan.

Jindal Steel Ltd had filed the petition seeking anti-dumping
probe on imports of hot-rolled flat products from these countries.

Countries excluded from the levy are hot rolled flat
products produced by Acerinox, Spain and exported by Acerinox Malaysia. There
will also be no anti-dumping duty on similar products produced and exported by
Outokumpu Stainless of Finland.

The anti-dumping duty levied on import of stainless steel
HRC products from various countries are as follows:

USA-  $165.32/MT.

Taiwan-  $432.44/MT

European union-  $649.55/MT

South Africa-  $160.14 – $200.50/MT

No anti-dumping duty has been levied on hot-rolled flat
products imported from South Korea.


Mundra Port supplies Coal through 20 km long conveyor belt

Country's largest coal importing centre, Mundra Port and
Special Economic Zone (MPSEZ), announced that West Basin bulk coal handling
terminal delivered 62,718 metric tonne a day of coal to Adani Power's plant
located adjacent to the port.

This large tranche of coal was delivered through a
high-speed 20 km long conveyor belt between the port and power plant running at
a speed of 6000 metric tonne per hour. 

Besides Mundra, Adani Group is also developing port and terminals at Dahej,
Hazira, Mormugao and Visakhapatnam in India and Adani Abbot Point in Australia.
the diversified group has set target of handling 200 million tonne of cargo by

Mundra Port alone is expected to handle 40-45 million tonne of coal annually by
2013. Mundra Port is country's largest coal importing centre and caters to the
requirement of state electricity boards besides Adani Power and upcoming
Tata Power. 

Source: The Economic Times


Coal ministry opposes proposal for sale of surplus coal by captive-mine holders

The coal ministry has opposed a
suggestion by the Planning Commission that they be allowed to sell surplus

“The value of the mineral held by the captive
coal holders is very high in terms of today's prices and block holders will be
unduly benefited if permitted to sell coal. If the suggestion of the Planning
Commission is agreed then it will pave the way, allowing captive block holders
to make huge profits,” coal ministry has said in reply to the Plan panel.

Contending that only 28 coal
blocks out of 193 alloted to various power, steel and cement firms in the past
18 years for captive use have come to production, the ministry is of the view
that if they are permitted to sell coal they would not show interest in
bringing up their end use plants.

“If a part of these reserves
are diverted block holders would again turn to government for making
available equivalent amount of reserves for meeting their requirements sometime
in future after extracting profit from reserve if they start selling coal,
they would never show interest in bringing up end use plant,” the coal ministry

“The Ministry also disagreed with
the panel's suggestion of increasing the prices of domestic coal to partially
meet the high generation cost, saying it will go against the spirit of power
sector reforms.”