“Sponge Iron demand was under pressure in last two months and is expected to rise in future”, told industry experts.
“Prices were under pressure on power shortage and high power tariff in many states. As power problems are likely to resolve after monsoon, we anticipate most of the steel mills to start operating smoothly resulting in better demand”, said a senior official at a primary steel producing plant.
Another official from Monnet Ispat anticipates demand of Sponge Iron to move up in Sep-Oct as infrastructure projects in construction sector re-start post monsoons.
Local sources in China report SteelMint that many mid sized steel mills which have long term contracts with Australian and Brazilian miners are deferring supplies as they have option of buying cheaper iron ore from spot market.
“There are many mid sized steel mills in China who are unwilling to take deliveries on long term contract prices as spot prices are much lower. Miners have no other option but to sell it off in spot market at a lower price.Buying is very weak as mills are waiting for some more correction before they could make purchases.”said a iron ore trader based in Rizhao port.
It looks we can see some stability in iron ore prices next week, he further added.
Mining companies in Karnataka had their fingers crossed as Supreme Court had to take up the Karnataka mining ban case on the August 31 and there is hope that the ban on category Ã¢â‚¬ËœAÃ¢â‚¬â„¢ mines could be lifted. But hearing has been postponed to Monday.
It's been a year since the Supreme Court banned mining in Karnataka and it's been a year of ups and downs for the mining companies involved.
Sources say that there are 43 mines which come under category A and A1, out of which 18 mines have got all the clearances and can start operations after final hearing by Supreme Court.Rest of the other mines have to wait till they get all the clearances which might take another six months.
Now in April this year, there was some hope with the apex court saying mining in Karnataka can resume once the reclamation and rehabilitation or (R&R) plan gets approved by the central empowered committee, subject to other forest and environmental clearances, the industry thought this was a final go-ahead from the Supreme Court but its last hearing on 23rd August seems to have overridden this.
Industry experts still feel that there is lack of clarity on what basis ore will be sold, if it is e-auction then who would decide the base price.
We have to wait till Monday, September 3rd to get further clarification on Karnataka mining case.
Billet prices in India stay at almost similar levels. Market traders report that sellers are reluctant to sell at lower prices, other than current levels amid low production.
“Manufacturers are unwilling to sell at lower levels and current offers for Billet stand at Rs 30,800/t (Ex works Raipur) and Rs 30,200/t (Ex works Raigarh) respectively,” said a broker based at Raipur, Chattisgarh.
Billet prices in Mumbai and Hyderabad corrected marginally on weak demand.
Falling offers from Chinese steel makers has always been a threat for Indian flat steel makers.Steel prices in Chinese market
have dropped sharply in last few month due to over-production & weak demand.Consequently,Steel imports to India have moved upto 53% in past few months.
“Looking at the current scenario,manufacturers might cut offers for September as imports are much cheaper than domestic prices.Current offers for Imported HR coil lie in the range of $550-560 CFR India and domestic offers lie in the range of Rs 35,500-36,500 (Ex-Works Price) i.e $630-660/MT”said an importer based in Mumbai.
Whereas,domestic steel players claim that higher prices of iron ore by NMDC does not leave much scope of correction in prices in the near term.
Iron ore miners in Odihsa, which is the largest iron ore producing state in India, might keep prices unchanged for September, reported industry sources.
“Prices are being reviewed by management, but I do not see much of a chance of prices going down,due to factors like, hike in iron ore prices by NMDC (largest iron ore miner in India) and also sponge iron prices have been stable for last few weeks.” said an official from one of the premier mines.
On the other hand sponge manufacturers are hopeful that some price-cuts will generate demand for iron ore as most of the plants are still running at lower capacities.
“Some cuts in iron ore prices will certainly increase demand for iron ore and many plants which are running at under-capacity will improve their production levels.” said a sponge manufacturer based in Durgapur, West Bengal.
Chinese spot market for hot rolled coil (HRC) fall further on Friday as number of steelmakers announced their price cuts.
“The price reductions by producers weighed on the spot market since end-users held on further in anticipation of even lower prices,” a trader based in Shanghai said.
Prices in Beijing were unchanged at 3,380-3,400 Yuan ($532-535) per ton, but they remained 100 Yuan ($15.75) per ton lower than a week earlier.
Jiuquan Steel cut HRC prices by 70 Yuan ($11.02) per ton while Panzhihua Steel made a decrease of 40 Yuan ($6.29) per ton Liuzhou Steel on the other hand slashed their prices by 250 Yuan ($39.37) per ton.
Activities of trading remained slow as market participants are waiting for Baosteel major steelmaker in china to release their October prices in early September.
Ukraine and Russia: Pig Iron is being traded
at high prices in Ukraine and
Russia after continuous loss for some months. Offers rise as sales
improve slightly in September, iron ore prices are falling up to $90/mt level
and scrap prices are stable due to steady US flats market.
Ukrainian producers sold
at $400/mt FOB Mariupol ($430-440/t CFR southern Europe and Turkey), $30/mt up
from July. Lowest sales in July were at $395-400/mt CFR and $370/mt FOB
Mariupol. Russian sellers closed
September bookings at $440/t FOB Baltic Sea.
Russian sellers face weak demand from Europe and Asia and also US buyers
purchase material for September and October from Brazil.
Southeast Brazil: A southeastern Brazilian
state is offering Pig Iron at $460/mt FOB, high by 9.5% as compared to $420/mt
FOB in July.
Demand is weak in
Brazil's domestic market and now that export offers rise on high scrap prices in other countries, exports is
expected to happen in few numbers.
China: Pig Iron prices in North
China slip from Yuan 2,850-2,900/mt on the 14th of August by to Yuan 2,700/mt ($426/t) on a delivered to mill
basis with 17% VAT on the 28th of August. Offers fall by around
Yuan 300/mt over the past one month.
Further correction is
expected as iron ore prices decline and finished steel products offers slipped
to below last yearÃ¢â‚¬â„¢s level, on economic slowdown and also as buyers hold
negative sentiments in dull domestic steel market.
Essar Steel on Thursday said he has received orders from two clients based in the Middle East and Africa for API-grade steel pipe worth Rs 4 billion ($71.9 million).
The first order received in Africa is for 4,000 tones of offshore line pipe which will be used in a Chevron project.
Whereas the order from the Middle Eastern client is for 45,000 tones of size 48-inch high-grade coated pipe to be supplied in the coming quarter, a release from the company said.
This takes the company's total input order of its pipe mill to Rs 10 billion.
The current capacity of Essar Steel's pipe mill is 600,000 ton per year, which consists of 275,000 ton per year of API-grade helical submerged arc welding line pipe and 325,000 ton per year of API-grade longitudinal submerged arc welding line pipe.
The company operates the fourth-largest single location flat steel plant in the world at Hazira Complex, Gujarat with an annual capacity of 14 million ton per year.
Indian finished steel imports jumped up to 53% in Apr-July 2012 according to Indian government.
Market sources report that on low offers by Chinese steel mills have made imports attractive.Say HR coil of 2.5 mm offers from China stand at around $570/t,CFR India where as domestic offers stand at around $630-660/t Ex-works and despite weak rupee against dollar, imports have increased.