Monthly Archives: October 2014

Port Congestion a Major Issue for Iron Ore & Coal Import – Tata Sponge

Sponge iron manufacturers have been struggling hard with souring of Iron ore and coal. Above that falling Scrap prices in the global market and low steel demand in the domestic market have forced many units to scale down their production.

Though, global Iron ore prices have fallen, it has not benefited Indian steel mills, as capacity to discharge is much lower than quantum of imports happening.

Steel mills have to wait for weeks & months to get their cargo cleared. Some mills are forced to go for imports at different and efficient port by paying high logistical costs.

Mr. Deshpande, MD, Tata Sponge
Mr. Deshpande, MD, Tata Sponge

India’s one of the largest coal based Sponge iron manufacturers, Tata Sponge’s MD, Mr. Deshpande in conversation with SteelMint stated its views on the present scenario.

How is Sponge Iron Situation in India?

Iron ore situation is really bad in the domestic market. First of all, it is not available in the domestic market and whatever is available is of inferior quality and high price. People have perception that Iron ore & coal prices have corrected in the global market, so it should also impact Indian Sponge iron prices. 

But, it is not that way, by the time imported cargo reaches to plant site, cost goes high owing to factors like port congestion and unavailability of railway rakes.

Sponge iron prices have corrected a bit. Current offers are at around INR 21,000/MT ex-works. However, there is limited scope of price correction.

Imported Iron Ore

Though, Iron ore prices have come down in the global market, it has not helped Indian manufacturers owing to logistical and infrastructural bottlenecks. It is seen that Paradip port is over congested and Haldia followed suit. Also, there are port problems in South Africa, which is currently a preferred source for imports of Iron lump.

On similar lines, it is difficult to transport imported coal owing to unavailability of rakes. We have to use trucks that are costlier by at least USD 15/MT (INR 900/MT).

Mining Issues in Odisha

There are several issues with mining in Odisha. The state government has not been pro-active in getting clearances for mines, which have been closed. It seems, it will take time and we do not expect quick recovery in near-term.

India is the largest producer of Sponge iron (DRI) in the world with an annual production of about 24-25 MnT in comparison with an installed capacity of 45 MnT.

Current Prices (INR/MT)

Particular

Delivery, Grade

Price

W-o-W Change

Sponge Iron (C-DRI)

ex-Raipur, 80 FeM

21,400

+50

Sponge Pellet (P-DRI)

ex-Raipur, 80 FeM

19,400

+100

Billet

ex-Raipur

29,300

-200

Ingot

ex-Raipur

28,650

-200

Silico Manganese

ex-Raipur

57,500

+250

Pig Iron

ex-Raipur, Steel

23,900

-200

Re-bar

ex- Raipur, 28 mm

31,500

-200

 
High Carbon Ferro Manganese

Indian HC Ferro Manganese Price corrects on continued quiet Trading

There is limited buying appetite for Ferro manganese in India with the underlying weakness in the steel market.

On weak buying activity, Indian producers of Ferro manganese have reduced their prices by INR 500/MT with deals now being concluded at INR 56,500/MT ex-Raipur and INR 57,500/MT ex-Durgapur. Affected by low demand, Indian producers have lowered prices in the domestic market in order to boost sales, but producers lament for continuous sluggish demand in the last two weeks.

“Each time we think the price is low enough, it manages to slide below that level,” remarked a Ferro manganese producer.

Traders were also reluctant to buy despite seemingly low prices for Ferro manganese.

“Nobody wants to buy now and be stuck with it, while, the market keeps tanking,” mentioned a trader based in Raipur.

SteelMint assessed that the Indian steel mills were reportedly cutting down on their Manganese alloy stock to maintain cash flows amid thin or negative margin.

Export Market

The export market is still quiet with low activity and now the pressure is on producers to make their offers more competitive. Export offers for 70% min grade is around USD 930/MT FoB India (East Coast) and 75% min is being offered at USD 1,000/MT FoB; unchanged W-o-W. Overseas demand for Ferro manganese is also really low.

“Demand for Ferro manganese is falling on all fronts, both foreign and domestic,” said a producer source in Durgapur.

SteelMint learned that most market participants hold a pessimistic outlook towards the future Ferro manganese market trend.

 Exchange Rate : USD 1 = INR 61.40

 
Tata Steel

India: Tata Steel to add 2.45 lakh tonnes pa Ferrochrome Capacity in Gopalpur

Bhubaneswar: Tata Steel is planning to expand Ferrochrome capacity of its Gopalpur plant to 2.45 lakh tonnes with an investment of INR 8 billion. The company is waiting for the Environmental Clearance for the second phase expansion, Arun Mishra, Vice president, Tata Steel Gopalpur has said.

Meanwhile, the first phase of plant with 55,000 MT pa capacity will start producing Ferrochrome by May, 2015. The company is investing INR 4 billion in the first phase.

The project is crucial for the company, which is defending the allocation of its Chromite mines at Sukinda in Jajpur district of Odisha. The mining lease is under consideration of the Odisha government for renewal. Recently, JSL has filed a special leave petition requesting to direct the Odisha government to reject the lease renewal.

Earlier, Odisha based Ferrochrome producers like JSL, Indian Metals and Ferro Alloys (IMFA), Balasore Alloys (earlier Ispat Alloys), Ferro Alloys Corporation (FACOR) and Nav Bharat had filed case in the Orissa High Court opposing Tata’s lease renewal. But, the case was dismissed by the court.

Total installed capacity of Ferrochrome in India is 1.75 MnT.

 

India: Structure Prices in Raipur correct by INR 400/MT further

Structure manufacturers in Raipur (Chhattisgarh) are bounded to correct their prices on the background of modest steel demand in the domestic market. In the month of September, the prices were unchanged, but observing the poor response from market, they have reduced the offers again by INR 400/MT in this week. As per SteelMint’s data analysis, Structure prices had corrected by around INR 1,000-1,400/MT in Oct’14. Whereas, it was unchanged in Sep’14.

In spite of falling Structure prices in India, conversion gap from MS Ingot/Billet to Structure is at the same level of around INR 3,200-4,000/MT because of same price correction in MS Ingot/Billet & Scrap.

A Structure manufacturer based in Raipur said, “We still have ground stock of material. The prices will remain at these levels until the inventory get cleared.”

Individual Structure offers are competitive. Some of the manufacturers are offering the material at below market price in order to attract buyers. The manufacturers are running their plants at 60-70% level. Market sentiments seem to be positive but will sustain for long term.

Khyati Ispat is offering 116 H-Beam at INR 34,500/MT ex-Raipur (advance payment). While, Monnet Ispat is offering 500 I-Beam at INR 36,900/MT ex-Raipur (advance payment).

On the other hand, Wire (HB, GI, Binding wire) offers in Raipur & Durgapur have corrected by  around INR 200-1,700/MT M-o-M because of dull sales and  rise in imports from China.

Structure manufactures based in Raipur have changed the gauge difference for some of Structural (Angle, Channel, Beam) items. For more information click on http://www.steelmint.com/fileForMail/Raipur_Structure_Gauge.xlsx

Structure Price Movement
Structure Price Movement

 

 

Coal Imports to India down by 15% W-o-W

India’s weekly coal import have fallen by 15% to about 3.5 MnT at the week ended on 25 Oct, 2014.

SteelMint learned that coal imports to India have fallen by 15% in week 43. About 70% of coal has been imported on major ports of the country. In last week, about 3.5 MnT coal is imported on overall 33 major & minor Indian ports. Out of the total quantity, about 2.8 MnT was Thermal coal, 0.56 MnT was Coking and rest was Coke.

Indonesia, Australia & South Africa were the major suppliers at the end of week. Out of the total weekly imports, India has imported 2.1 MnT and 0.53 MnT of Thermal coal from Indonesia and South Africa respectively. Also, the country has imported about 0.54 MnT of Coking coal from Australia.

Mundra has imported maximum quantity i.e. about 0.65 MnT of coal, followed by Dahej, which has imported about 0.44 MnT. This shows a growth of about 90% as compared to preceding week.

Coal Import at Indian Ports

Port

Week 42

Week 43

Mundra

                    0.76

                    0.66

Dahej

                    0.22

                    0.44

Jaigarh

                    0.18

                    0.24

Krishnapatnam

                    0.35

                    0.23

Paradip

                    0.24

                    0.23

Dhamra

                    0.24

                    0.22

Navlakhi

                    0.14

                    0.20

Mormugao

                    0.22

                    0.17

Vizag

                    0.08

                    0.16

Others

                    1.58

                    0.92

Total

                    4.01

                    3.46

 

Government controlled 12 major Indian ports have imported about 39.5 MnT of Thermal coal during H1 FY15 (Apr’14-Sep’14) and registered a growth of 22% against last year imports.

Few market experts anticipated that India’s coal import is likely to increase in FY16 on the background of coal blocks de-allocation and constantly increasing domestic prices. International coal prices have already declined by 10-20% as compared to last year.

Indonesian 4200 GAR

Indonesian Coal
Currently, Indonesian 4200 GAR is being offered at USD 48.5-49/MT (36.5 FOB) and USD 49-50/MT CFR East and West Coast of India respectively. Meanwhile, 3800 GAR is being offered at around USD 41-42/MT CFR India.

(USD 1=INR 61.41)

 

India: Will firm Sponge Prices encourage Scrap Buying?

Scrap prices fell in tune with Billet price post Diwali. But, stability in Sponge iron prices may create room for Scrap imports.

Billet prices, which were speculated to surge post Diwali, have sloped down. Scrap followed suit with a fall of USD 5/MT in offers. Whereas, Sponge iron was found odd one out here, maintaining prices at the same level.

In FY14, Sponge iron consumption in India was around 23-24 MnT whereas total Scrap consumption stood at 13-14 MnT (out of which about 4.5 MnT was imported).

Sponge Iron resists for Price Correction

While analyzing the Sponge price movement, SteelMint learned that the quantum of correction observed in Sponge prices was comparatively smaller than Scrap & Billet prices.

Market speculations are high that Sponge prices may remain stable at these levels. It is to be noted that prevailing uncertainties in procurement of Iron ore & coal have led to higher domestic prices, which has restricted sharp correction in Sponge iron prices. Market anticipates that Sponge manufacturers are likely to scale down their production to hold prices at these levels.

In case of stability in Sponge prices, some Scrap importers are optimistic that buying interest for Scrap may improve in next month.

Industry experts anticipate imports of Scrap are likely to grow to an extent of 5.5-6 MnT owing to falling Scrap prices in the global market and expected fall in Sponge production.

Particular

Delivery

Grade

Prices in INR/MT

Change (W-o-W)

Sponge iron

ex-Raipur

80 FeM

21,400

+50

Scrap- Domestic

ex-Mumbai

HMS 1&2

23,700

-300

Scrap- Imported

CIF Nhava Sheva

HMS 1&2

335-340*

-5

Pig iron

ex-Raipur

Steel grade

23,800-24,000

-200

Billet

ex-Mumbai

30,400

-250

*USD/MT
Source: SteelMint Research

 

sponge_scrap_price _trend

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Ferro Silicon

India: Ferro Silicon Prices Unchanged at INR 76,500-78,500/MT

Ferro silicon market conditions are stable as buying interest remains positive from end-users.

Ferro silicon prices in Bhutan are at the same level W-o-W. 70-75 grade is being offered at around INR 78,500/MT (ex-Bhutan). The export market is dull as demand from European buyers is still weak. It is being offered at around USD 1,320/MT FoB Kolkata.

Although, buying interest is good, Indian Ferro silicon prices remain unchanged, leading to deals concluded at considerably firmer levels. In Guwahati, 70-75% grade is being offered at INR 76,500/MT. Indian Ferro silicon producers are hopeful for some upward price movement in the next month and any possibility of price correction is ruled out.

SteelMint learned from sources that Ferro silicon market seems to be encouraging as most market participants are holding an optimistic outlook because of good demand. It is expected prices could rise in the coming month.

 Exchange Rate: USD 1 = INR 61.43

 
Sponge Iron

Indian Sponge Makers cautious over High Input Cost

Indian Sponge makers are cautious over high input cost and low trade prices in the domestic market. Albeit, Iron ore & coal prices are rising consistently, Sponge iron prices are falling down.

Limited supply of Iron ore and coal has created barrier for Sponge manufacturers. Prices in the domestic market have fallen only by INR 400-800/MT. C-DRI is being offered at INR 19,500-21,300/MT. While, Pellet sponge (P-DRI) offers are hovering in the range of INR 17,700-19,300/MT (FeM 78-80; ex-works).

Sponge manufacturers based in eastern India stated, “We are waiting for rise in steel demand & prices. If the scenario continues, we will prefer to shutdown the plants in coming days because there is requirement of minimum price gap of around INR 12,000/MT between Iron pellet and Pellet sponge. The present high prices of Iron pellet (INR 9,000/MT) and lowest prices of Pellet sponge (INR 19,000/MT) are creating loss of around INR 1,000-2,000/MT to us.”

Scrap Prices correct by over USD 30/MT in last 1-month

One of the prime reasons that is building pressure on Indian Sponge iron prices are falling offers of imported Scrap, which have corrected by over USD 30/MT in last 1-month.

Current offers for HMS 1&2 from Middle East/Europe/Africa are in the range of USD 335-338/MT CIF Nhava Sheva, which was at USD 365-370/Mt a month back.

Offers for Iron Pellet & Sponge Iron

Market

Iron Pellet

(Fe 63)

Pellet Sponge

(FeM 78-80)

Sponge Iron

(FeM 78-80)

Jharsuguda/Rourkela(Odisha)

                         8,400

                                    18,600-18,700

         19,500-19,700

Durgapur (West Bengal)

                         8,200-9,000

                                    19,000

21,000

Raipur (Chhattisgarh)

                         8,600-8,800

                                    19,300

21,300

Bellary (Karnataka)

                         7,950

                                    17,700

           19,600

All basic prices are in INR/MT (ex-works) 

 

Indian Pellet Prices Constant despite fall in Sponge Iron Prices

Indian Pellet manufacturers have maintained offers for the previous couple of weeks despite of softening Sponge iron prices by upto INR 300/MT.

Pellet (Fe 63%) offers are quoted at INR 8,000-8,800/MT in eastern/central India and at around INR 7,200-8,000/MT in western/southern region (ex-works prices). Pellet prices in Karnataka have corrected by around INR 150/MT because of low demand for finished goods and falling prices of semi finish.

Sponge iron plants in eastern region have either closed down or are utilizing least workable capacity over high Pellet prices and scarcity of Iron ore. Resumption of mining operations of merchant Iron ore mines in Odisha and Jharkhand that had been asked to stop mining has seen no development yet.

Shortfall of Iron ore in the domestic market has restricted Pellet prices to fall from current level despite weakening Sponge iron prices. Declining Iron ore prices in the global market have not shown a significant impact on Indian market as Iron ore are being imported by JSW Steel and Tata Steel and not by mid-sized steel mills.

Sources mentioned that Kamachi Steel is offering 120,000 MT of South African Kumba Iron ore lump (Fe 64%) on FLC/HSS basis. Prices of this material to be delivered in December at Krishnapatnam port are quoted at USD 104/MT CFR.

Brazil based Vale is offering Fe 65% Pellets at USD 115/MT CFR India for November (1st half) delivery. While, South African Kumba Iron ore lump (Fe 64%) is being offered at USD 100-102/MT CFR India for delivery during the end of next month.

Pellet offers from Bhilwara (Rajasthan) based Jindal Saw is quite competitive at INR 7,200/MT (landed at Kandla) in contrast to imported Pellet offers.

Indian Iron Pellet Prices

City

Grade (Fe%)

Prices in INR/MT

Barbil

63

Arya Iron & Steel –  8,200*

Jharsuguda

64

Shyam Metalics & Energy –  8,400

Raipur

63

Godawari Power & Ispat –  8,800

Durgapur

63

Rashmi Metaliks –  8,200

64

Shyam Sel –  9,000

Bellary

63

MSPL – 7,950

60

Janki Corp –  6,900

Hospet

61

BMM Ispat – 7,450

60

BMM Ispat – 7,250

Mangalore

63

KIOCL –  7,750

Kandla

63

Jindal Saw –  7,200**

Basic prices
*loaded into wagons
** delivered, excise duty & CST extra
Source: SteelMint Research

 

India: LANCO plans to purchase Imported Steam Coal

Udupi Power Corporation Limited (UPCL), a Lanco group Company, has floated a tender for supply of imported Steam coal for its power plant at Udupi (Karnataka) on CIF basis.

UPCL intends to procure 3 MnT imported Steam coal through two separate bids (each for quantum of 1.5 MnT) for its 1200 MW (2 X600 MW) Udupi Power Project at Yelluru, Udupi District, Karnataka.

General Conditions

  • Bidders can quote in multiple of 0.5 MnT pa. However, minimum quantity of 0.5 MnT should be from single source
  • Bidder shall be ‘Established Coal Producer’ with an annual production capacity in preceding 3 years i.e. from FY12-FY14 of 1/2/3 MnT respectively in accordance with the offered quantity of 0.5/1.0/1.5 MnT respectively
    Or
    Bidder shall be a ’Regular Supplier’ of bulk quantity of coal having supplied annually more than 0.5/1.0/1.5 MnT respectively in accordance with the offered quantity of 0.5/1.0/1.5 MnT during preceding 3 years i.e. FY12-FY14
  • Bidders should have past experience in supplying coal directly or through PSUs to power/cement/steel/fertilizers/utilities anywhere in the world

 Specification

  • Imported Steam coal
  • Gross Calorific Value (GCV):  5,350-6,250 Kcal/kg
  • Moisture (as received basis): 15.5% max
  • Ash (air dried basis): 12% max
  • Sulphur (air dried basis): 0.8 % max 

Quantity: 3 MnT 

Important Time & Date

  • Bid submission due date: 13.00 hrs IST on 08 Dec, 2014
  • Bid opening date: 16.00 hrs IST on 08 Dec, 2014