Monthly Archives: January 2013

Black Sea Pig iron prices firm in last fortnight 

Starting from the mid of January, due to stable iron ore prices globally, improved flat steel products buying rather than longs and firm Turkish hot rolled-coil prices, Black Sea origin Pig iron prices are constant.

A recent deal for Ukrainian February production Pig iron was heard to close at $4/MT lower i.e. $391/MT FOB Black Sea in comparison to the first deal of February output.

Though, Turkish scrap prices have fallen slightly, delayed deliveries of Pig iron from Sea of Azov due to problems in shipping and low yield as compared to scrap, have resulted for range bound Pig iron offers.


Decline in Imported coal prices may not benefit the power sector

After being hit by many negatives in
the last few years, there seem to be emerging some positives for the power
sector. Recently a hike in tariff was
implemented in states like West Bengal, Tamil Nadu, Delhi, etc and it is
believed that a few other states will also follow suit. The PMO's office, coal
ministry and the power ministry also seem to be conscious about resolving the
power crisis situation in the country.

Although coal production has not
shown any overnight increase, the government has asked the coal ministry to
de-allocate the private sector coal blocks and give them to Coal India.
Besides, it has asked Coal India to appoint mine developers and operators (MDO's) in order to expedite coal production from these mines.

However, on the international front the
coal prices have cooled off. The demand for coal has declined marginally, as
reflected in the coal prices. The Indonesian coal reference price in the last
one year has came down by 14% and there is mixed opinion about whether the
coal prices will decline further from the current level. The cooling of the
international coal prices looks beneficial for the Indian power sector which
has some of the companies importing coal from Indonesia.

Also, the coal prices in other
countries such as Australia, South Africa, etc have also shown a significant
decline. The Newcastle Index (Australian coal price index) is down by 18% while the Richard Bay Index (South Africa) is also down by 19%. The higher
drop in the coal prices is seen in the Delivered Ex-Ship (DES) Antwerp/Rotterdam/Amsterdam (ARA) Index which is down by nearly 30%.

The fall in the coal prices can be attributed to the over-supply situation
created due to the availability of cheap natural gas. The U.S. has been
replacing coal with cheap natural gas. Besides, the fall in industrial activity
in many countries which has also helped the coal prices to correct in the range
of 20-30 % in the year's time. The slowdown in the Chinese economy has resulted
in lower coal consumption and thus affecting the Indonesian coal prices which
have decline.

The situation may look good for
sectors dependent on coal such as power, steel and cement but one need's to
consider the national currency which has hugely depreciated by 27% during this
time. Therefore, the net impact will not be on the profits of the companies.
Moreover, from here on the coal production is likely to be cut and this will
increase the coal prices. Coal prices from here on will have a limited downside
and hence the fall in coal prices would not benefit companies engaged in the
Indian power sector.



Mining companies may have to seek green nod for full lease area at one go

The environment
ministry plans to change forest clearance norms for mining projects to
make them simpler and discourage firms from acquiring excess land. It is
considering asking mine developers to seek forest clearance for the entire
lease area instead of the current practice of seeking nod in phases. This
requires them to seek clearances several times as and when they expand the
mining area.

For the government, it would mean getting the net present value of the full
forest area required for the mining lease, and the compensatory afforestation for
the diversion, instead of the present piecemeal system. “This is a welcome
move. This way you don't have to halt production on a 20-30 year lease every
time you need forest clearance,” said a SAIL official.

“The government will get upfront payment for the entire lease area. The
developer is anyhow in possession of the entire area. So the government gets no
benefit from it. Making it mandatory to get clearance for the entire area will
help the Centre get the NPV and the compensatory afforestation
payment right at the start,” a top government official said.

The ministry feels this will also ensure developers are realistic in assessing
the total forest area that needs to be diverted. “Given the money
developers will have to shell out at the outset, I'm sure they will be realistic,”
the official said.



INDIA-Shah commission to visit Odisha on 22nd Feb

The justice M.B.Shah who heads the Shah Commission that inquiring into the illegal mining case will visit Odisha on 22nd of February,
which is considered as the final visit before submission of the report.  Earlier the miners and the state government
have requested the commission to provide one more chance to put forth their

A couple of weeks back the Eastern
Zone Mining Association (EZMA) had complained that miners from Odisha have not
been given a fair chance to present their case by the Shah Commission.

This will be the second visit of Justice Shah to
the state. He had led a probe team to the state in December, 2011 and visited
several mines in Joda circle. His visit was followed by two trips by his team
members led by 
UV Singh,
additional PCCF, and Karnataka in October and November, last year.

Both the Odisha government and the miners had requested the
commission to provide them one last chance to present their sides. Accordingly
as per the permission of the commission the Eastern Zone Miner’s Association
(EZMA) had presented its side through 
well known lawer Ramjethmalani, senior Supreme Court Advocate Abhishek
Manu Singhvi and Odisha High Court Lawyer Ashok Parida at the commission’s
office at Ahmedabad in December.  On the
other hand the state government had also applied through Advocate General Ashok
Mohanty and senior SC lawyers U.U.Lalit, Shibashish Misha and Subhransu Padhi.

Reported by Tapan Moharana


Odisha rejects steel federation demand for separate e-auction

Odisha government has turned down the demand of local steel industries to
conduct separate e-auction of minerals. The Steel and mines department has made
it clear that the entire quantity of minerals would be e-auctioned after
setting aside the quantity meant for captive consumption and export commitment
by the miners.

cannot conduct separate e-auctions for inside and outside state parties. Also
there is no question of letting lower base price for local industries. MSTC
will conduct the e-auction process on behalf of the state government, for which
the relevant terms and conditions will be finalised within 2-3 days and after
the finalisation of terms and conditions our department will sign an MoU with MSTC”said
state Director of mines Mr.Depak Mohanty after the meeting with MSTC officials
on e-auction.

has been learned that the department has amended some key terms and conditions
in the draft guideline proposed by MSTC.

The All Odisha Steel Federation (AOSF) representing more than 200
steel, sponge iron and allied industries in the state has demanded separate
e-auction for state based end user units and outside state units. In its
memorandum to the steel and mines department the federation has also demanded
for reasonable base price of iron ore in the e-auction.

On the other hand MSTC has made it clear that there will be no
question of cartelisation as the entire system is very transparent and foolproof.
“The E-Auction process will involve registration of buyers and sellers and
there is no question of cartelisation as the entire system is very much
transparaent” said Mr.S.K.Tripathy,CMD of 

The e-auction of minerals like iron ore is expected to start from
1st of April this year.

Reported by Tapan Moharana


CIL to increase price of Prime Coking Coal for Steel Authority

Coal India the world's largest coal producer is planning to
increase the price of the best quality of coking coal it supplies to Steel
Authority of India Ltd.

Bharat Coking Coal Ltd a unit of CIL is planning to charge
80 %of the landed import price from April compared to 70 % at present, said Mr.
Ashoke Sarkar Technical Director. The unit supplies 1.5 million metric tons of
coal to the state-run steelmaker, he said. The company also plans to change
prices every month beginning April, compared with quarterly pricing now.

The increase in domestic rates may counter the benefit of
lower international coal prices at the steelmaker. Steel Authority and
competitors in India are negotiating coking coal prices as low as $160 a ton for the quarter ending March, a 32 % decline from previous year
prices. High production capacities and slowing demand in Europe have
brought down prices of the steelmaking ingredient last year.

“We are proposing the new pricing formula only for washed
coking coal, all of which goes to Steel Authority,” Sarkar further added.

The steelmaker buys about 3 million metric tons of coking
coal from Coal India, or about 25 % of its need and imports almost 70 % of its
requirement which is mostly from Australia.



Indian Iron ore Pellet prices have further scope for correction

“Movement in Pellet – being a raw material, has been impacted by low demand from sponge iron units, slow off take of steel semis – Billet and finished steel products.

Standalone sponge iron units as well as integrated steel plants are making no extra purchases of Pellet but as per requirement only.

In Odisha belt, sponge iron buyers now prefer to purchase iron ore due to improved availability on account of mining operation resumed by few of the mines.

Hence, stabilized prices of Pellet might not sustain at current levels but witness some correction in the range of Rs 200-300/MT in Feb.

No doubt, Pellet manufacturers with a beneficiation plant have better survival ratio“, Mr. Sambeet Das, Vice President (VP) for Sales & Marketing at MSP Steel & Power Limited, Kolkata told SteelMint.


Pig iron makers in Durgapur lower offers sharply

Indian Pig iron makers have maintained offers in last few days that look to have bottomed out.

“Industry is surviving at break even and further drop will result in an only option left out for plants i.e. to take a shut down”, said a major producer of Pig iron in Odisha.       

Pig iron producers in Durgapur (West Bengal) have reduced prices continuously that have touched quite low levels in a week's time.

Both steel (Rs 23,000-23,000/MT) and foundry grade (Rs 26,500-28,100/MT) material are being traded at Rs 800/MT low.

NINL's February Pig iron prices might gain Rs 500/MT and its current stock position is around 80,000 tons.


CHINA:Spot Iron Ore fines prices move up by $2-3/t

Iron Ore prices in Chinese spot market moved up before Chinese new year on reducing iron ore inventories at Chinese port and rising steel prices in domestic market.

“Buying sentiments are good in China as market see prices to stay firm after holidays. With falling stock on Chinese port, sellers have raised their offers by 20-30 Yuan. Australian PB fines was heard to be sold at $151-152/t CFR. Indian offers for 63.5/63 heard to be in range of $153-154/t CFR” said an iron ore trader based in China. 


Indian rupee may hit 52 levels against USD before budget- Experts

The rupee hit a 14 weeks high of 53.22 on Thursday morning and was trading at 53.25 versus its Wednesday's close of 53.30 as expectations of dollar inflows for stake sales in state-run firms keep sentiments bearish.

Market expect momentum to continue at least till Indian federal budget and Rupee might strengthen to 52 against USD, said Mr Jayesh Mehta, MD and treasurer Bank of America to a private news channel.

Traders said exporters were also seen selling the dollars on expectations of a stronger rupee in the near-term. India's ministerial panel approved selling a 10 percent stake in Oil India on Feb. 1, the oil secretary said.