Monthly Archives: February 2012

Spot iron ore fines continue to move up; traders bet on further gains

Spot iron ore prices inched up further as Chinese steel
mills replenished stockpiles and traders bet on further gains as a pickup in
the steel market is expected soon.

Sellers of imported iron ore in China lifted offer prices by
another dollar per tonne. Offers for Fe63.5/63 of Indian fines stayed at
$147-148 but prices of lower grades moved up by $1/MT. Australian Newman fines
was also moved up by $1 to reach $143-145/MT CFR

Chinese mills are restocking on iron ore as they slowly ramp
up steel output ahead of the seasonally busy periods in March and April for the
construction and manufacturing sectors, traders and analysts said.

But some are doubtful whether the iron ore demand will be sustained.

“Steel traders are buying high and selling low now, suggesting
that the current rise in ex-factory prices is mainly being driven by steel mills
rather than end-user demand. We are quite sure that end-user demand has not yet
picked up, so mills will be very cautious “, said analysts.


Power tariffs may go up by 50 paise/unit

Private Power producers in the country
fear that power tariffs may go up by Rs 0.50 a unit if the Government decides
to impose special duty on imported equipment.

The Government proposes to levy
Customs duty on import of power equipment with more than 1,000 megawatt
capacity. There is speculation that the Cabinet Committee on Economic Affairs
will consider the proposal this week.

Opposing the move, they have
written to the Prime Minister and other senior Ministers, under the aegis of
the Association of Power Producers, saying this will not only result in
increased tariffs but will also delay capacity addition.

“Given the high import duty of
over 20 per cent, and with rupee depreciation against all major currencies, the
power tariff from all generation projects will go up by 30-35 paise a unit. At
the consumer level, this will translate into an increase in prices by over 50
paise a unit,” they argue.

At present, power generation
equipment for projects below 1,000 MW bears a duty of 5 per cent while there is
nil duty on equipment for projects over 1,000 MW. The Arun Maira Committee had
favoured a duty of 14 per cent, while a Committee of Secretaries recommended 19
per cent for larger projects.

The duty hike is being considered
to help domestic equipment manufacturers. But the power producers say that
domestic manufacturers are already burdened with a huge order-book, putting a
severe constraint on their ability to supply within a given period.


Strike hits cargo handling at major ports, except Kolkata

Cargo handling at almost all the Government-owned major
ports barring Kolkata, was affected as workers joined the nation-wide strike,
called by the central trade unions on Tuesday.

However, private ports across the country functioned

There was hardly any loading and unloading of containers at
the Jawaharlal Nehru port, which handled about 50 per cent of the country's
container traffic, a senior official said.

At Mumbai port, operations at the bulk terminal were
affected. At Kandla port in Gujarat, 95 per cent of the workers did not report
for duty. Dry cargo movement was severely affected.

Movement of cargo was also affected at Kochi, Vizag and New
Mangalore ports.

Source: The Business Line


Ingot prices remain firm on strong demand from South India

Ingot prices which shot up by Rs 1,000-1,500/t last week on good demand from UP steel mills ( as scrap supply was limited due to UP elections).

Now it is South India which has kept ingot prices firm. Prices have shot up by Rs 500-1,000/t in Southern India (Thanks to extended power cut in Hyderabad and Chennai.)

Power cut in Hyderabad has been extended from 2 days to 3 days which has made manufacturers to raise offers by Rs 500/t (currently trading at Rs 35,800++).

“Demand has been good from South India, undoubtedly due to power cuts.” said an Ingot manufacturer based in Raipur. 


Domestic ferrous scrap prices remain firm with higher priced imports

Domestic ferrous scrap prices continued to move up.
Prices for local ferrous scrap move up by up to Rs 300/MT. Market participants
are finding hard to infer the future outlook of the market, with the increment
in Ingot and finished prices across India despite low demand for the product.

HMS (80:20) was traded higher by Rs 300/MT in Mandi
Gobindgarh on improved buying interests coupled with the higher priced imported
cargoes in the market.

Indian buyers have booked a large number of
containerized shipments in the past few days as they look to restock their
supplies. Prices from Europe and the USA rose in line with globally improved
demand. Demand from India has slowed this week, however, after US and European
sellers increased their offer prices to take advantage of recent buying.

“Domestic ferrous scrap market needs direction as
prices movements are uncertain. Prices could not correct as expected. Imported
scrap is also available at higher prices”, said a trader based in Mumbai.


Global flat products prices move up 

Flat product prices have moved up globally with market sentiments being positive
for the near term.

Area wise market highlights are as follows:

UK: The effective prices for
S275 HRC this week were quoted at ($792/MT) i.e. stable from last
week, but further increases are expected. “Tata Steel in UK is almost fully booked
for April and traders have low stocks at docks of HRC”, said a trader.

Turkey: Turkish producers are
offering CRC at $800-820/tonne ex-works as against $760-780/MT in early
February and prices in the near term are expected to increase by $10-20/MT. Offer
for HRC also moved up to reach $720/MT ex-works last week i.e. up by $40/MT
from early February.

China: Traders lifted their
offer prices to test the market after the rise in inventory levels
slowed down and in anticipation of a seasonal improvement in end-user demand
next month. Prices of Q235 5.5mm HR Chave increased to RMB
4250-4260/MT ($674-676/MT).

India: GP Coil Prices of ESSAR went up by Rs 300-500/MT. GP Coil of 0.85
mm was quoted at Rs 43,900/MT i.e. up by Rs 200/MT. Whereas, 0.45 mm was
quoted at Rs 45,500/MT i.e. up by Rs 500/MT from the prices quoted previous


Indian Pig Iron prices remain stable on low production; unlikely to correct soon

“Indian Pig Iron
prices remain unchanged due to low production and might not correct  in the few days to come” said steel producers.


“The supply of Pig
Iron from places such as Raipur, Raigarh, Rourkela and Jharsuguda has been
critical. Most of the plants are closed on account of unavailability of iron ore
and higher coal prices.Chances are thin that prices will correct in near term”, said an Ingot manufacturer based in Raipur (Chattisgarh).


Steel Grade Pig Iron
prices in Raipur is currently trading at Rs. 27,500/MT and Foudry Grade at Rs.
29,500/MT while prices in Raigarh are hovering around Rs. 26,800-900/MT. Pig
Iron (Steel Grade) for Rourkela is trading at Rs. 26,000/MT and Foundry Grade
at Rs. 27,800/MT. Jharsuguda Steel Grade Pig Iron prices are hovering at Rs.
26,000/MT and Foundry Grade at Rs. 27,500 and Cuttack is at Rs.25,200-500/MT
for Steel Grade and Rs. 27400/MT for Foundry Grade.  


Market participants
also report Steelmint that Pig Iron prices will remain intact on account of
higher raw material prices like iron ore and imported scrap.  



Physical Coal Prices drop $1/t in Europe on oversupply

Prompt physical coal prices fell by around $1.00 a tonne on
Tuesday in line with an earlier dip in oil and pressured by oversupply,
particularly in Europe.

March loading South African coal was bid at $104.00/MT FOB
Richards Bay, keeping a slight premium over April and May cargoes but $1.00
lower than the previous day.

But the accumulation of unwanted coal cargoes of every
origin is also weighing on prices and will continue to do so until Asian demand

“You can easily find all sorts of coal, every origin is
available and U.S. material is being offered by traders, utility traders and
producers directly – there's still too much coal,” a source at a major European
utility said.

U.S. thermal coal with a sulphur content of anywhere from 1
percent to 4 percent is still flowing to Europe but sellers are also having to
look at new markets in India and Turkey .

Indian traders said they have been offered and bought U.S.
coal with around 3 percent sulphur at $101-110 a tonne CIF India, which nets
back to $60-65/T FOB – a level below most producers' cash costs.

The demand-supply imbalance in the market is said to
continue until China resumes substantial spot buying, which may not be for
another month or two and till then the pressure will be built upon Atlantic

Some of the recent trades include a second half March
loading South African cargo was bid at $105 and offered at $105.65, down around
$1.00 and an April South African cargo was bid at $104.00, also down $1.00.

Source: Reuters


“We are hopeful the Supreme Court will lift the ban in some of the mines in K'ntka”- JSW Steel

JSW has been hit hard by a ruling of India's top court last year that banned iron ore mining in three districts of Karnataka. Before the mining ban JSW used to get iron ore through contracts with miners in the state. However, since August, JSW, which doesn't own an iron ore mine, has been relying on court-mandated auctions of the raw material to run its factory in Vijaynagar town.

“We are hopeful the Supreme Court will lift the ban in some of the mines, which would ease supply pressures for the steel industry in the state,” 
Chief Financial Officer Seshagiri Rao