Monthly Archives: January 2012

Coal India to replace Jan price notification soon 

Coal India (CIL) to replace the price notification issued on
1st Jan 2012 due to opposition from cement and power sectors which
are its customers.

Nirmal Chandra Jha, CIL's chairman said, a new notification
will soon replace the Jan. 1 notification on pricing delinking local prices
from international rates. This will effectively lower product prices.” He
also said coal prices would continue to be linked to the gross calorific value
of individual grades of the dry fuel.

CIL, the largest producer of coal in the country, introduced
a new pricing regime based on gross calorific value (GCV) on 1 January. The
mechanism has a band of 17 grades of coal, compared with seven under the
so-called useful heat value system.

This led to an increase in coal price and while CIL said the
higher rates were the result of the new system that was followed
internationally, users of the fuel alleged that the company had raised them in
an opaque manner.

Users said prices were up 5-20% and some said they were
surprised by the hike.

The new GCV based pricing mechanism will be reviewed
after Jan-Mar quarterly results, India's coal minister Sriprakash Jaiswal said.

 

Coal shortage hits NTPC power generation capacity

Coal shortage has hit the power
generation capacity of the country's largest power producer NTPC which said
that adequate availability of coal could have helped them to produce 10-15% of
more electricity.

Responding to a query on how much
capacity has been affected by coal shortage, NTPC Chairman and Managing
Director, Mr Arup Roy Choudhury, said it would be difficult to quantify.

“Definitely, it (coal shortage)
is hurting our generation … may be we could have produced 10-15 per cent more
every year, if we had got the required amount of coal,” he told PTI in an
interview.

For the current fiscal (2011-12),
NTPC's coal requirement was about 164 million tonnes (mt). Out of the total,
about 114 mt is estimated to have come from Coal India.

In October last year, there was a
significant dip in domestic coal supplies for NTPC plants that were estimated
to have impacted about 4,000 MW power generation capacity.

The disruption was mainly on
account of strike by Coal India workers, Telangana agitation and heavy rains.

Source: The Business Line

 

Chinese buyers wait for BHP's tender to get some direction 

Buying interest from Chinese steel mills have not picked up
very well post Lunar holidays as many of them are waiting for clearer signs on
where prices are heading before boosting their stockpiles of the raw material.

The hesitation is largely caused by the poor outlook for steel
demand growth in China in a knock-on effect of its slowing economy, keeping
steel prices in check.

A tender by global miner BHP Billiton for MAC and Newman
iron ore fines that closes later on Tuesday should give the market a clearer
direction about prices, and some traders are expecting firm bids.

“I won't be surprised if the prices are slightly better
than index. After the holiday, some mills may be running low on their inventories
so they need to buy from the market,” said another Shanghai-based trader.

Rio Tinto , the world's second-biggest iron ore producer,
sold around 70,000 tonnes of 65-percent grade South African iron ore
concentrate at $151.5 a tonne, cost and freight, on Monday, around a dollar
more than a similar cargo in mid-January, just before the Lunar New Year
holiday, traders said.     

 

Coal India cuts prices, revenue may be hit – report

Coal India , the world's largest coal miner, cut prices
on Monday, a move that may weigh on the state-run company's revenue, the Mint
newspaper reported on Tuesday, citing a senior government official.

“The exercise of reviewing the prices has been done.
There is definitely a reduction,” the newspaper quoted Alok Perti, coal
secretary, as saying after a board meeting of the company. “Probably there
could be a reduction in the revenue.”

Coal India will implement a new pricing mechanism by the
month-end but will ensure this will not result in higher prices for power
producers, federal coal minister Sriprakash Jaiswal had said last week.

Source: Moneycontrol

 

South African Coal export prices rise to highest since November

Coal export prices at South Africa's Richards Bay,
the continent's biggest terminal for shipping the fuel, advanced to the highest
level in nearly three months.

Prices rose by $3.26, or 3.1 percent, to an average $107.17
a metric ton in the week ended Jan. 27, according to data on Bloomberg from IHS
McCloskey. That's the steepest increase since Dec. 23 and the highest level
since Nov. 4.

The price is quoted on a free-on-board basis, which excludes
delivery costs.

Source: Bloomberg

 

India may soon ask Indonesia to reconsider Coal export restrictions

India may soon ask Indonesia to reconsider restrictions
imposed on coal exports as Jakarta's move is hurting several Indian companies
which had planned power projects to be based on the fuel imported from the
Southeast Asian nation.

Indian Coal Secretary Alok Perti told reporters Tuesday that
the power producers had raised the matter with the finance ministry, which
along with the Ministry of External Affairs “may soon take it up with
Indonesia.”

Top Indian industrialists met Indian government officials
earlier this month with suggestions including bilateral talks with Indonesia to
remove restrictions on coal exports and other measures to boost growth in the
power sector, which is facing problems of a coal shortage and funding.

“Many Indian producers bought mines there [Indonesia] thinking they will be owners of coal there and owners of power projects in
India,” Perti said. “But the restriction on export of some grades of
coal has led to an additional increase of at least $20-$22 per ton of
coal.”

Perti said Indonesia in September effected a law that
prohibits coal producers from selling the fuel, even to their affiliate
companies, below a reference price that is linked to international rates and
needs adjustments every year. The law has made coal imports from Indonesia
expensive.

 

5 reasons why Indian steel prices look weak in near term

Steel prices in India have gained around Rs 2,000-3,000/MT in last few weeks on expensive iron ore and new pricing policy by Coal India (Which had made coal prices dearer by Rs 300-400/MT).

But as per the expert's opinion, the hike in Indian steel prices may not sustain in near term and a correction of Rs 1,500-2,000/MT is expected. 

Following are the reasons why the hike in Indian Steel prices may not sustain: 

1. Revision of Coal Prices by CIL

2. Better availability of Iron ore in Orissa and Karnataka

3. Cheaper imports of Scrap and Coal

4. Tight Liquidity 

5. Weak demand from Construction and Auto sector

 

Spot Iron ore prices remain unchanged; Fe 63.5/63 at $148/MT

Spot
iron ore prices remain unchanged on thin volumes. Fe 63.5/63 of Indian fines was
quoted at $148/ MT (CnF).

Chinese
buyers wait for BHP's tender for clear signs before making any further buying. A
tender by global miner BHP Billiton for MAC and Newman iron ore fines will
close on Tuesday which should give the market a clear picture regarding prices.

Market
players are expecting prices to move up in the coming days as steel mills may
be running slow because of limited stock and they need to buy stock from market.

In
the domestic market, Iron ore prices remain steady because of shortage of iron ore
on account of ban on mining in some states and import duty rising to 30%. NMDC is
also not in a hurry to revise its prices as Iron ore prices in the international
market has been steady from quite some time. “If at all there will be any
reduction in the prices, then it may be very less”,said sources.

 

Indian buyers to place bulk orders for imported ferrous scrap – Importers 

Buying activities in the Indian imported ferrous scrap market are likely to improve, say importers. Global slowdown in the demand and stable Rupee might prompt Indian importers to make bulk purchases in the days to come.

 

A cargo of 2000 tones of Shredded scrap was sold at US$ 465/MT CFR Kandla by a UK based supplier. While another cargo of 1,200 tones of HMS 1&2 (80:20) was sold at US$ 445/MT CFR Kandla by a Malaysian supplier.

 

“Sentiments in the ferrous scrap market are improving as buyers have started enquiring for bulk orders. Rupee is also stable in the Forex market which might help demand to stay firm in the days to come. Offer prices from exporters have already bottomed out due to weak demand globally in past few days. So, prices may move up once buying improves”, said an importer based in Kandla.

 

“Poor off take from countries such as China & Turkey in the last week had improved the in-flow of offers for India buyers. But, now as Turkish buyers will resume bulk buying along with Chinese traders post holidays, prices are likely to move up”, said an Importer based in Mumbai.

 

Limited supply keeps local ferrous scrap prices firm

Prices for ferrous scrap in the local market
remain firm on limited supply. Prices moved up by Rs 100-500/MT on Tuesday at places
like Mumbai, Raipur, Jalna and Kandla.

However, HMS (80:20) in Mandi Gobindgarh traded
at Rs 30,300/MT. Slowdown in trading activities due to the on-going elections made
suppliers to keep their prices unchanged.

Slightly improved demand lifted ferrous scrap prices
by Rs 500/MT in Raipur. Further, HMS (80:20) in Mumbai traded higher by Rs
500/MT due to limited supply of both local and imported cargoes in the market.

According to a market source, “Local suppliers
have raised their prices due to short supply of the product (both imported and
local scrap). Shipments for imported cargo are likely to reach in few days and
this has encouraged local suppliers to keep their prices firm. Availability of
domestic scrap is also limited and buyers are placing small orders at high
prices. We expect prices to remain firm in the near term.”