Monthly Archives: February 2015

Budget 15-16: Basic Customs Duty raised by 2.5-5%

Today, The Ministry of Finance has raised the basic customs duty on Steel items under chapter 72 & 73 by 2.5-5% in order to discourage import from China & Russia

Budget 15-16 bought some relief to the Indian Steel industry. The basic customs duty on  all steel items falling under chapter 72 is raised to 10% vide the notification No. 10/2015 of the Ministry of Finance dated 1 Mar’15. This may restrict imports from China & Russia to some extent.

Flat Products Duty raised to upto 15%

SteelMint assessed from policy documents that the customs duty on prime Flat steel products have been raised from 7.5% to 10%. Whereas products like defective CR Coils, Tinplates W/W & Tin free steel (Ch 7209, 7210, 7212) will now attract a duty of 15% as compared to 10%, earlier.
 
Long Steel Duty raised to 10%

Similarly, SteelMint assessed that customs duty on Bars & Rods under chapter 72 are raised from 5% to 10% giving some relief to domestic steel manufacturers.

Some Steel manufacturers are looking for further clarity on Clause 89 of the Finance Bill 2015, which proposed these changes.

Official document from the Ministry of Finance effective from 1 Mar’15 cites,

“Tariff rate of Basic Customs Duty on iron & steel (Chapter 72) and articles of iron or steel (Chapter 73) is increased from 10% to 15%. Clause 89 of the Finance Bill 2015 refers. However, the existing effective rate of BCD on these goods are being retained. S.Nos.329A &334A of notification No.12/2012 – Customs, dated 17 Mar’12 as inserted by notification No.10/2015 -Customs, dated 1 Mar’15 refer. Further, it is clarified that the existing concessional rates of Basic Customs Duty in respect of goods falling under Chapters 72 & 73 under S.Nos. 330, 331, 332, 333 & 334 and other similar entries of notification No.12/2012-Customs dated 17th March, 2012 will continue.”

Imports of Steel items

As per industry data available with SteelMint, Steel imports (under chapter 73) in FY14 was 1 MnT Whereas, it was 0.78 MnT in FY15 (Apr’14-Nov’14).

Total Imports & Exports Long Steel (Apr’14-Jan’15)
Imports Exports
Bar and Rods 1.38 0.58
Structurals 0.05 0.09
Rly materials 0.01 0
Total Non-Flat/Long 1.44 0.67
Total Imports & Exports of Flat Steel (Apr’14-Jan’15)
Imports Exports
Plates 0.92 0.37
HR Sheets 0.11 0.05
HR Coil/ Strip 2.02 1.23
CR coil/ Sheets 1.84 0.59
GP/ GC/ Sheets/ Coil 0.38 1.38
Elect sheets 0.34 0.00
TMBP 0 0.00
Tin Plates 0.16 0.03
Tin plates W/W 0.01 0.00
Tin free steel 0.07 0.00
Pipes 0.14 0.22
Total Flat Steel 5.99 3.87

Qty in MnT

Please click here to download NOTIFICATION No. 10/2015-Customs

Please click here to download NotificationNo. 12 /2012-Customs

 

 

India: NMDC cuts Iron Ore Prices by INR 300-500/MT

NMDC has reduced lump prices by INR 500/MT, fines by INR 300/MT and ROM by INR 440/MT for March, 2015.

India’s largest Iron ore producer, NMDC has reduced Iron ore prices by upto INR 500/MT for Mar’15. The miner had cut Iron ore prices by upto 11% in Feb’15.

NMDC Iron Ore Prices from Dec’14-Mar’15

Month

10-150 mm 10-40 mm, DR CLO 6-40 mm

Blue Dust/Fines

Mar’15 2,860  4,040  3,250  2,460
Feb’15 3,300 4,540 3,750 2,760
Jan’15 3,690 4,990 4,200 3,060
Dec’14 3,690 4,990 4,200 3,060

Royalty @ 15%; bonus/penalty and other taxes extra
Source: SteelMint Research

NMDC Iron Ore Exports in Feb’15

NMDC Iron ore exports have fallen by 50% M-o-M. NMDC exported 0.14 MnT Iron ore in Feb’15 against 0.28 MnT in Jan’15.

Berthing Date

Quantity Vessel Name

Loading Port

8 Feb’15 70,000 Sunny Eternity Vizag
22 Feb’15 73,300 Tianjeen Pioneer Vizag
Total 143,300    

Quantity in MT
Provisional data
Source: SteelMint Stats, Customs

NMDC Iron ore sales via Karnataka e-auctions have also witnessed a downtrend. Iron ore sales via Karnataka e-auctions have fallen from 1.09 MnT in Jan’15 to 0.4 MnT in Feb’15.

 

Budget 15-16: SAD on Metal Scrap eases by 2%

Special Additional Duty (SAD) in Metal scrap of Iron & Steel, Copper, Brass and Aluminum reduced from 4% to 2%.

Modi Goverment hears the cry of Scrap importers and reduced the partial duty burden to certain extent. Budget brought about an ease of 2% on SAD for Scrap importers in India.

India’s majority of Crude steel comes from Secondary manufacturers, who are highly dependent on Scrap & Sponge for Steel production.Levying a duty of 4% on this crucial raw-material i.e. Ferrous scrap had blocked the working capital of these manufacturers, hurting the value addition by making it costlier.

What is SAD?

SAD is refundable tax levied on Scrap importers. It was introduced on 8 May’13 with 4% duty. It was imposed on Scrap imports to safeguard the interest of Sponge iron manufacturers in India. After introduction of SAD, imports of Ferrous scrap fell by around 42% in FY14 (i.e 7 MnT in FY13 to 4.1 MnT in FY14).

Though the budget did not introduced any change in custom duty which is still at 2.5%, partial exemption in SAD may provide relief to importers. This may also lead to increase in Scrap imports in FY16. India during Jan’15 of this financial year has imported around 4.3 MnT of scrap.

scrap_imports_5yrs* till Jan’15

 

NTECL issues Tender for 3.25 MnT Imported Steam Coal Purchase

NTPC Tamil Nadu Energy Company Limited (NTECL) issued a global tender for purchase of 3.25 MnT imported Steam coal on CIF/High Sea Sales basis for its Vallur Thermal Power Project.

NTECL, a joint venture of NTPC &TANGEDCO has invited bids for eligible bidders for purchase of 3.25 MnT imported Steam coal of any origin except Indian. The material must be supplied to Kamarajar Port or Ennore port.

Scope of Work

Bidders have to take care for arranging vessels, handling, port clearances, clearing of the consignments at loading port, custom clearances and coordination with discharge port. Stevedoring/ Unloading of coal at discharge port (Kamarajar port) will be arranged by NTECL. The bidder will be responsible of timely delivery of the material upto discharge port.

Requirements to Qualifying

Bidders need to mention detail of coal mines from which, they intend to supply the material. They should have an experience of minimum 1.5 MnT dry bulk commodity during past 12 months. Also, average annual turnover of the bidder in the preceding 3 financial years should not be less than INR 2.81 billion.

Bids submission will last on 31 Mar’15 at 4.30 hrs and techno-commercial bids will open on the same day at 15.00 hrs.

Note: NTECL previously floated a global tender for purchase of 3.25 MnT imported Steam coal which closed on 5 Feb’15.

APGENCO tenders to purchase 4 MnT Non-Coking Coal

Andhra Pradesh Power Generation Corporation Limited (APCENCO) has also floated a global tender for the purchase of 4 MnT Non-coking coal (3 MnT for Dr. NTTPS and 1 MnT for RTPPS); GCV: 5,700 Kcal/kg of foreign origin on FOR destination basis via Kakinada/ Vizag/ Chennai/ Krishnapatnam or any other ports in India. Last date of submission of bids will be 20 Mar’15 at 17.00 hrs and opening bids will be on 23 Mar’15 at 15.00 hrs.

Dr NTTPS-Dr Narla Tata Rao Thermal Power Station, Vijawada
RTPPS-Rayalaseema Thermal Power Station,Muddanur
For eligibility criteria Click here

 

 

India: Import Duty on Met Coke raised to 5% in Budget 2015-16

Import duty on Met coke has been raised to 5% w.e.f 01 Apr’15, which was at 2.5%.

Import duty on Met coke has been raised to 5% w.e.f 01 Apr’15 in Budget 2015-16, which was announced by Finance Minister Arun Jaitley today; the duty was at 2.5%. Thus, imports shall be costlier by USD 10/MT.

When asked about the impact to R K Goyal, MD at Kalyani Steel, he expressed, “Our cost of imports will increase by USD 10/MT as we are reliant on imports. We neither have a coke oven plant, nor do we procure the material from domestic market because imported Coke is of superior quality”.

The Steel industry was hopeful of some rise in import duty because of increasing imports from China. Met coke exports from China attracts no duty since Jan’13. As per our statistics, India has imported 3.1 MnT Met coke from Apr’14-Feb’15. Out of this, 58% has been imported from China alone.

Now, costlier imports may boost domestic Coke manufacturing and local suppliers may well lift their prices by INR 575-600/MT according to our calculation.

The import duty on Coking coal remains at 2.5%, which is a right step for the integrated Steel producers with Coke making/Cokeries. Though, Coke imports will be costlier, demand and supply dynamics for both domestic and imported Coke, shall play an important role too.

Had there been any change in basic customs duty on Coking coal which is at 2.5%, then it would had nullified the imported vs domestic costing difference on Met coke.

 

Budget FY15-16 – Excise duty increase to 12.5%

BUDGET HIGHLIGHTS FY15-16

– SAD (Special additional duty) in Metal scrap of Iron & Steel, Copper, Brass & Aluminum reduced to 2% from 4%

–  Import duty on Met coke increased to 5% from 2.5% Custom duty on Bituminous coal reduced to 10% from 55%

– Service Tax increase to 14% from 12.36%

– TO INCREASE EXCISE DUTY TO 12.5% from Present 12.36%

– TO REDUCE CUSTOMS DUTY ON 22 ITEMS: Items not declared Yet

– Basic rate for Corporate tax to be 25% over next 4 years from present rate 30%

– Allocate Rs 2.46 LK CR For Defense in FY16

– To Do Away With Distinction Between FPIs (Foreign Portfolio Investment) & FDI (Foreign Direct Investment)

– To Set Up 5 Ultra Mega Power Projects Of 4,000 MW

– TO Merge FMC & SEBI

– To Put In Place Direct Tax Regime

– Investment in Infra structure to go up by 70,000 Cr

– Propose 1.25 Lakh CR Public Investment For FY16

– To Allocate Rs 25,000 Cr For Rural Infrastructure

– To Encourage Ports In Public Sector To Corporatise

– Will Establish National Infra Fund, To Allocate Rs 20,000 Cr

– PROPOSE TAX-FREE INFRA BONDS FOR ROAD, RAILWAYS & INFRA PROJECTS

– To Allocate 25,000 Cr For Rural Infrastructure

– GST To Be In Place By April 1, 2016

– Completing 1 Lakh KM of Road a Top Priority

– To See 6 Cr Units Of Rural & Urban Housing By 2020

– Likely to end FY15 with GDP of 7.4%

 
Met Coke

India: Met Coke Market Highlights

BF Grade Coke/LAM Coke – Import Market

  1. An Indian buyer finalizes 25,000 (+/-10%) Chinese BF grade Coke (CSR 64 & CRI 24) import deal at USD 190/MT CFR India. The vessel is expected to reach Indian port during mid-Apr’15, freight rate is estimated at USD 14-15/MT. Landed cost of the imported Coke is around INR 13,000-13,500/MT. While, procurement from domestic cokeries is costing INR 14,000-14,300/MT (landed)
  2. East India based Blast Furnace operator received vessel AP Slano, carrying 36,300 MT. Met coke at Paradip port, last evening. The Chinese BF grade Met coke (25-90 mm, CSR 64 & moisture >5%) was booked at USD 187.75/MT CFR India in the 1st week of Jan’15
  3. Also, a Ferro Alloy producer located in East, is anticipating vessel Oslo Trader containing 21,200 MT mid-sized Coke, to reach the same port on 12 Mar’15
  4. Global traders are offering Chinese BF grade/LAM Coke (30-80 mm & CSR 64) at USD 190/MT CFR India (USD 175-176/MT FoB China), for mid-April delivery
  5. In Apr’14-Feb’15, 3.1 MnT Met coke has been imported to India. Out of this, 58% has been imported from China

Domestic Market

  1. Demand for domestic Coke is robust in contrast to imported Coke because of an average 10 to 15 days waiting time at major Coking Coal/Coke importing ports such as Vizag, Paradip and Haldia. While, at ports like Gangavaram and Vizag, it is taking  3 weeks to 1 month for railway indent to get matured. Thus, importers shall have to wait for about a month more to receive imported Coke
  2. Rail freight for Coal has been hiked to 6.3% in Railway budget 2015-16. Thus, cost of making Coke shall increase up to by INR 100/MT and the industry may probably pass on the hike to consumers. Merchant Met coke manufacturers are anticipating rise in Met coke import duty, which is 2.5% as of now. While, Steel manufacturers expect import duty on Coal to be withdrawn
  3. Cokeries in east India are offering BF grade Coke at INR 13,500-14,100/MT (ex-works). Prices in West Bengal are in the range of INR 13,800-14,000/MT (ex works)
  4. Cokeries located in West India are offering Met coke in the price range of USD 14,000-14,500/MT, Nut coke at USD 13,000-13,500/MT and Coke breeze/fines at USD 11,000-11,500/MT (all prices are ex-works)

Nut Coke and Coke Fines Import Offers to India Rise

  1.  5-15 mm Chinese Nut coke is being offered at USD 181-183/MT CIF India and below USD 180/MT CIF India for bulk quantity. 10-30 mm Nut coke prices are in the range of USD 187-188/MT CIF India
  2. Traders are offering 5-15 mm domestic Nut coke (screened) at USD INR 13,000/MT (ex-works) and prices for 10-25 mm material are INR 13,250/MT (ex-works). BF size Coke offers are quoted at INR 13,500/MT (ex-works)
  3.  0-10 mm & FC 82-83% Coke breeze/fines import offers are in the range of USD 135-137/MT CIF India
 

India: SAIL invites Bid to Procure Calcined Petroleum Coke

Steel Authority of India Ltd (SAIL) intends to procure Calcined Petroleum Coke (CPC) through an open global tender from the overseas or domestic suppliers.

The bids are invited on or before 25 Mar’15 by 15.00 hrs (IST) Detail of Tender

  • About 35,530 MT of CPC for 24 months i.e. starting May’15 to Apr’17 for SAIL’s various units
  • Tenderer should either be a producer of CPC or must be an Indian Central PSU trading house or overseas supplier with due authorization from the CPC Producers
  • Indian agent can also submit offer on behalf of foreign principal. If offer is submitted by the foreign principal, then his offer submission will be considered final
  • Bidder should have installed capacity of about 15,000 MT pa of CPC with all documentary proof

Market Plant Size (mm) Quantity
 1 BSP 02-10 10400
 2 RSP 02-10 2,375
DSP 02-10 1,400
ISP 02-10 2,350
BSL 02-10 500
 3 ASP 03-20 500
 4 VISP 0-5 240


Specification

  • Calcined Petroleum Coke (Low Sulphur content)
  • Fixed Carbon: 99% min
  • Sulphur: 1.2% max
  • VM: 0.4% max
  • Ash: 0.5% max
  • Moisture: 0.1% max

Bidders must quote min 70% quantity for market 1 & 2 and 100% quantity of market 3 & 4 also they must quote for all the four markets and for all plants in Market 2.(Please refer to the table for more detail).

Coal Tender
KOMIPO (Korean power producer) invites tender for purchase of 140,000 MT Bituminous Coal till 11 Mar’15.
 
Iron_Ore

Odisha Granted 2 more Months to take Decision on the Renewal of 18 Mines

Bhubaneswar: On Friday, The Supreme Court of India granted 2 months more to the Odisha government for the decision on the 18 mines those are awaiting second and subsequent lease renewal.

As many as 26 mines, including these 18 merchant mines were closed on the basis of the SC’s order on 16 May’14. However, the state government had allowed 8 mines to operate through an express order. But, there’s no decision taken on the rest of the 18 mines. The state government had requested for more time to examine the eligibility of these mines for the renewal and it was subsequently granted time till 20th of Feb’15 the court.

However, recently the state had requested again for some more time in view of the changes in rule after enactment of the MMDR (Amendment) Ordinance in January this year. In its latest petition filed earlier this month, the state government mentioned that it had taken enough steps to comply with the SC order and had even sent the show cause notice to leaseholders for cancellation of their leases. However, the new provisions in the MMDR Amendment Ordinance had tied its hands.

In the Mining Ordinance that came into effect on 12 Jan’15, the provision for renewal of mining lease is done away with. Instead, all leases awaiting renewal were automatically allowed to operate till 2020 in case of merchant mines and upto 2030 for industrial users with captive mines, as per Section 8 (A) 5 and 8 (A) 6 of the Ordinance, subject to fulfillment of lease conditions.

 

India: Pig Iron Export Tender aborts on No Response

NINL’s export tender did not receive any response owing to steeply felling global Pig iron prices.

NINL issued a global tender on 3 Feb’15 for 40,000 MT Pig iron that expired on 26 Feb’15. Sources mention, “Company did not receive any participant to bid for the export tender. There were no bids earned.”

Participants believe that steeply declining Pig iron prices in the global market is resisting the Indian export purchase. The sudden decline in the prices is owing to competitive Billet & Scrap offers from Russia.

Current offers of Pig iron in CIS nations are at around USD 280-285/MT, FoB Black sea. Whereas, the previous export tender from India was settled at USD 310/MT, FoB East coast of India. This is about USD 20/MT costlier compared to CIS offers, which are a bench mark in present trading scenario.

On 10 Mar’15. NINL has one more export tender for 40,000 MT Pig iron. Keeping in view the global updates & the upcoming tender, the company’s further action is not yet clear on the failed tender.
In this case, company may pull in the material for domestic sales rather than re-issuing.

NINL’s Domestic Affairs

Company has recently issued new offers for N2 grade Pig iron at INR 18,800/MT (ex-Cuttack) with a price cut of around INR 600/MT from its previous offerings. It is also providing an additional discount of upto INR 700/MT on bulk purchase.

Participants showed a fair response to the new offer. Few quick deals have been heard at around INR 18,600-18.800/MT in 2 days.

Sources mentioned that currently, the company’s N1 grade Pig iron is out of stock and therefore it’s focusing on N2 grade sales. Last offers for N1 grade was at INR 19,400/MT with discounts of upto INR 200/MT.

Indian Pig Iron Outlook

Pig iron prices in major markets have remain stable. Raipur & Raigarh manufacturers look assertive and they’re offering the product at same level i.e. about INR 21,400-21,500/MT & INR 20,800-20,900/MT respectively, ex-works. Similarly, Durgapur manufacturers also kept their prices unchanged at INR 19,200-19,500/MT, delivered to Durgapur.

Pig iron is in a tough of war as increased Ingot/Billet prices are supporting the prices but bearish global sentiments are bringing it down.