Monthly Archives: July 2015

South African Coal Prices Registered a Fall again in Week 31

South African coal 5500 NAR, which is mostly preferred by Indian sponge manufacturers is currently being traded at the level of USD 57-59/MT East Coast Indian ports which will be delivered at the end of Aug’15.

South African coal prices again saw a marginal fall this week which have already reached their bottom in running fiscal. The current offers are assessed at USD 57-59/MT CFR at East Coast Indian ports. The offers were at USD 60-61/MT last week. The current prices have also registered a fall of about 10% in this fiscal when compared with Apr’15 offers.

The constantly falling sponge iron prices, which have declined to INR 1,000-1,500/MT in last one month, are influencing Indian steel manufacturers to cut their production quantity. On the other hand, subdued global steel demand is also forcing international miners and traders to come up with low offers. Currently, coal buyers are unresponsive towards falling prices, on the other side coal traders and miners do not see any hope of recovery soon.

South African RB2, sponge grade coal is currently available at Vizag Port in stock & sale at INR 4,300-4,400/MT (all duties and clearance included), CST and VAT will be calculated further. Same grade material is being offered by Swiss Singapore at USD 57/MT CFR Vizag Port for Aug’15 shipments.

Adani Enterprises, one of the largest traders in India highlighted, East Coast based port Gangavaram, having about 30,000-40,000 MT of South African RB2 (5500 NAR) ready to sell material, is currently offered in the range of INR 4,750-4,800 /MT. Also, about 30,000 MT RB3 (4800 NAR) coal stock and sell material is being offered at the price of INR 4,300/MT at Dhamra Port.

The company also added that the current CFR prices have declined about USD 2-3/MT in last one month and are expected to go down more as the market is not looking hopeful.

Vessel Freight Rate
The freight of shipping coal in Panamax vessel from South Africa to India is assessed at USD 11-13/MT. Freight has risen marginally in last one month and is currently in the range of USD 8-13/MT for all size of bulk vessels.

South African RB2

 

Reliance Challenges Centre’s Decision to Cancel Chhatrasal Coal Block

Reliance Power moves to court against coal ministry’s move to take away Chhatrasal coal block from its subsidiary, Sasan, a 4,000 MW Ultra Mega Power Project (UMPP).

On Thursday, Reliance Power pleaded against government’s notification dated 7 May’15 to cancel Chhatrasal coal block allotted to Sasan (UMPP) in Delhi high court. The ministry had canceled allocation of the blocks referring to the verdict of SC in Aug’14.

Three coal blocks, namely, Moher, Moher-Amlori and Chhatrasal were allotted to Reliance Power to fulfill the fuel needs of Sasan UMPP. The power project requires about 16 MnT coal annually. However, the company was extractingt 9 MnT more coal to fuel its other projects, being permitted by the ministry in 2008.

Reliance Power filed a petition on the grounds that the coal obtained from Chhatrasal and other two coal blocks was the main reason for its bidding for power plants. It also mentioned that because of these three blocks allocated to Sasan (UMPP), the company had agreed to offer power supply from the power project at competitive tariff of INR 1.19 per unit.

Blocks Allotted to Sasan UMPP

Blocks Name of the party End Use Allotment Date Reserves
Moher PF Corporation Sasan UMPP Power 13.09.2006 402
Moher-Amlori PF Corporation Sasan UMPP Power 13.09.2006 198
Chhatrasal PF Corporation Sasan UMPP Power 26.10.2006 150

Qty in MnT
Source- SteelMint Research

It should also be noted that in June’15, centre instructed Reliance Power to curb its coal production from Moher and Moher Amlohri Extn from 20 MnT to 16 MnT.

 
Ferro Silicon

Ferro Silicon Market Continues to Remain Stagnant

Ferro silicon market was quiet W-o-W.Sources continued citing a thinly traded market and suggesting that the low trading volume has prevented any movement in prices again.

Ferro silicon prices in Bhutan remain static due to lackluster demand alongwith limited supply. Currently grade70-75 is being offered ataround INR 67,000/MT (Ex-Bhutan).Export offers from Bhutan were not heard as there is an absence of bids and deals.

Indian Ferro Silicon Prices Unchanged W-o-W

In line with steady prices in Bhutan, Indian producers have also kept their prices firm. Currently, grade70-75 is being offered at around INR 65000/MT (Ex-Guwahati) and INR 78,500- 79,000 /MT (Ex-Raigarh). Domestic demand for the material is low as the steel market is weak and sellers are adopting a wait-and-watch approach.

“There hasn’t been much change in the market recently. There is no major change in supply and demand fundamentals,” reported a producer from Guwahati.

SteelMint assessed thatferro silicon marketwould to remain stable and would prices remain around the current levels. Market watchers are uncertain about any price rise and most of them expect that market condition to remain stable for this month.

Exchange Rate : USD 1 = INR 64

 

SAIL Likely to Cut HRC Prices by INR 700-1,000/MT – Trade Sources

India’s biggest steel giant, SAIL is expected to reduce its HRC offers by INR 700-1,000/MT and other major players may follow suit.

Looking at increasing pressure of cheaper import from China, Japan and Russia accompanied with subdued domestic demand, Steel Authority of India Limited (SAIL) is likely to lower domestic HRC (2.5 mm grade) prices in the range of INR 700-1,000/MT, as informed by the market sources. However, it is also anticipated that other market players may follow suit.

Currently, China is offering HRC (2.5 mm grade) in the range of USD 325-330/MT whereas, the same is being offered from Japan in the range of USD 370-380/MT, and from Korea in the range of USD 370-375/MT (all offers are on CNF India basis).

India’s total HRC import in Q1 FY16 was 738,000 MT and CRC was 378,000 MT.

With price correction, HRC prices are expected to be in the range of INR 32,500-33,000/MT  (ex-Mumbai) and INR 33,000-33,500/MT (ex-Delhi, ex-Chennai and ex-Kolkata)*. With HRC price correction, CRC manufacturers in domestic market are also likely to follow suit. However, price cut is just an anticipation and no confirmation is made on the same by the company’s officials. *(including excise)

In order to deal with influx of cheaper import, Indian steelmakers are hopeful that the government may impose safeguard duty, which will restrict import and will boost domestic prices.

HRC (2.5 mm) as on 30 July’15

Particular Current Prices in INR/MT Expected Prices in INR/MT
Ex-Mumbai 33,500 32,500 – 33,000
Ex-Delhi 34,000 33,000 – 33,500
Ex-Kolkata 34,000 33,000 – 33,500
Ex-Chennai 34,000 33,000 – 33,500

Prices including Excise of 12.5%
Source: SteelMint Research

 

 

50-75% Capacity Utilization at Secondary Rebar Mills

Rebar offers fall by upto INR 3,100/MT M-o-M across Indian market.

Secondary rebar mills are operating below capacity across all Indian markets owing to adverse market situation. Continuous fall in prices, narrowed conversion margins from billet to rebar are some of the major reasons due to which production has been cut.

SteelMint surveyed various rebar manufacturers in few markets to assess the levels of capacity utilization of plants in the present market situation.

In Hyderabad, there are around 20 rebar makers, who have an average production capacity of around 250-300 MT/day. Here, major mills are running at around 50-60% capacity.

As per a semi-finish and rebar manufacturer based in Hyderabad, “We are facing a lot of pressure from the demand side as no major development activitiy is taking place.” He also added, “Our conversion spread has also reduced from INR 2,000/MT to INR 1,000/MT”.

In Wada, close to Mumbai, there are around 10 rebar mills that have a production capacity in the range of INR 300-500/MT including big and small mills. These are running at around 75% of the capacity.

As per a manufacturer based in Wada, “Rebar prices in Mumbai hit a 5-year low and there can be very limited downside from this level. Currently inventory is at a comfortable level.”.

In Raipur (central India), there are 20 major rebar mills including big and small, having production capacity from 300-700 MT per day running at almost 45-50%.

As per a billet and rebar manufacturer based in Raipur, “Presently, demand of finished steel is very weak and viability has became less from the neighboring states. He also said,,”Recent hike in power tariff by the state government of around INR 1/unit for all steel units has led to increase in cost of production”.

Indian Billet and Rebar Prices

Region 

City  Billet M-o-M  Rebar#  

M-o-M

Central Raipur 22,350 – 2,650 25,700 – 2,900
Eastern Durgapur 22,000 – 3,100 24,700 – 3,200
Western Ahmedabad 24,300 – 2,000 26,800 – 2,700
Mumbai 23,600 – 2,200 26,500 -2,200
Jalna 23,400 -2,800 26,600 – 3,000
Northern Gobindgarh(MGG) 25,500 – 3,250 30,200 – 3,100
Southern Hyderabad 24,000 – 1,000 27,000 – 500
Chennai 24,000 – 1,750 28,400  – 1,600
Bangalore* 24,550 – 1,700 29,300 – 600

Basic Prices as on 31 July’15, #=12 mm, *Ingot price
Excise duty, CST/VAT extra
Source: SteelMint Research

 

Will NMDC Cut Iron Ore Prices in August?

  1. JSW Steel increased iron ore purchases from Chhattisgarh mines significantly in July 
  2. Iron ore dispatches to Vizag steel increased by 29% 
  3. Chhattisgarh based sponge manufacturers reduced ore purchases
  4. NMDC’s iron ore sales in Karanataka’s e-auction observed an uptrend

NMDC, India’s largest iron ore producer, has witnessed a significant increase in dispatches in July’15. Total 1.12 MnT iron ore has been dispatched from NMDC C.G. mines, which is about 60% increment as compared to June’15, according to railway movement tracked by SteelMint.

Iron ore procurement of JSW Steel, Dolvi, has significantly increased. It purchased 281,050 MT in the month of July’15; purchase was very less in June’15.

Vizag steel, a major buyer of NMDC’s Chhattisgarh iron ore, has also increased its purchases by 29% in July month. It loaded 512,050 MT against June which was about 396,500 MT.

Iron ore purchases by Chhattisgarh based sponge manufacturers has dropped down to 14% M-o-M. In July’15, dispatches from NMDC’s Chhattisgarh mines within the state was 0.20 MnT and 0.92 MnT to other states. It was 0.23 MnT within state and 0.47 MnT outside state in the month of June’15.

Essar Steel, a major buyer of NMDC’s iron ore, purchased 350,000 MT iron ore in July’15; whereas, it had purchased 360,000 MT iron ore in June’15. Essar Steel procures Fe 64% Iron ore fines from Chhattisgarh mines. The company has a slurry pipeline of 267 km from Chhattisgarh to Essar’s Vizag plant through which it pumps the material.

NMDC sold 1.5 MnT in Karnataka iron ore e-auction held in the month of July’15 which was 0.5 MnT in June’15. 

NMDC may cut lump prices and keep fines prices unchanged for August 

It has been anticipated that owing to lesser buying interest by C.G. based sponge manufacturers in the month of July’15, the company may correct lumps prices, keeping fines prices unchanged for August deliveries.

NMDC is the largest iron ore producer in the country with a production of 30.5 MnT in FY15 and expected to raise its production by 35 MnT in FY16.

NMDC Dispatches from C.G. & Karnataka

NMDC-Map (3)

Note: Iron ore dispatches from Chhattisgarh are recorded from railway movement. Karnataka dispatches shown above are from e-auctions conducted by DMG.

 

Kumba Iron Lump Offers to India Remain Stable

Spot iron lump premium ascends to USD 0.115/dry MT unit.

Offers for imported lump from South Africa remains stable at USD 62/MT, CIF India for shipments to arrive by mid of Aug’15. Imported offers were seen at similar levels in last week.

South African lump remains a preference for importers owing to higher Fe content and high tumbler index. Out of the total iron ore import to India in Q1 FY16, share of import from South Africa was 79%.

India has imported 652,500 MT in July’15 (till 29 July’15). All import shipments recorded this month are from South Africa. Majority of the imported iron ore comprises of lump.

Status of Iron Ore Import Vessels to India in July’15


Date

Qty Shipper Country Unloading Port Vessel Name


Status

19 July’15 55,000 Various South Africa Mormugao Alam Sayang Berth
07 July’15 173,100 Kamachi Group Krishnapatnam Blue Hotse Berth
13 July’15 161,900 N/A Kandla C Oasis Berth
20 July’15 45,500 Kamachi Group Krishnapatnam MV JS Yukon Berth
20 July’15 160,000 JSW Jaigarh Frontier Kotobuki Berth
26 July’15 57,000 SSIPL Krishnapatnam Ikian Siakap Berth
29 July’15 15,000 N/A Tuticorin JS Yukon Expected
Total 667,500        

Qty in MT
N/A: Not Available
Provisional data
Updated till 29 July’15
Source: SteelMint Stats, Customs

JSW Steel Reduces Imports and Increases Domestic Purchases

The steel giant has reduced its iron ore imports and increased purchases from domestic market. Also, in the running quarter of this fiscal the company plans to prefer domestic material over imported ones over the expectations of improvement in iron ore availability in the domestic market.

Seaborne Iron Lump Premium Up by USD 0.005/ dry MT unit

Strong demand for iron lump premium was noticed in recent days as Chinese government strengthened pollution control norms compelling mills to use higher quality material. Thus steel mills seem to prefer lump over fines as sintering the latter involves more polluting steel making process.

Lump trades in China have also witnessed an increase this week over last week. Seaborne lump premium which was at USD 0.11/dry MT unit last week has raised to USD 0.115/dry MT unit in this week. Thus, bookings made for September shipments will go on higher prices.

To find out more about the global iron ore price scenario and participate in invaluable industry discussions, join us at India’s largest business conference on Iron ore, Pellet & DRI to be held in Kolkata on 13 & 14 August 2015 at Hyatt Regency. The summit is expected to be attended by 250+ companies from across the world. Register Now

Get answers to

  1. What will be the global iron ore prices, demand & supply scenario?
  2. Will Iron ore prices in China revive soon?
  3. How will the new MMDR Bill (2015) change the dynamics of the Indian mining industry?
  4. Will the export duty cut on Iron ore to 10% benefit the Indian exporters?
  5. Will Indian steel makers continue to import in FY16?
  6. What is the potential for Indian Pellet in Iran?
  7. How will coal block & linkage auctions impact DRI industry in India?
  8. Will Indian DRI dependence increase on South African and Australian Coal?

View Participant List

IIPS-Sign_10

 

Have Indian MS Billet Prices Bottomed Out? – SteelMint Survey

As per a recent billet survey conducted by SteelMint across India, 67% say prices will decline further and the rest 33% believe prices have bottomed out.

SteelMint recently conducted a survey in eight major states namely Punjab (Mandi Gobindgarh), Odisha, Chhattisgarh, Gujarat, Hyderabad, Maharashtra, Chennai and West Bengal. The motive behind this survey is to analyse the extent of billet price correction in domestic market.

During the survey, 67% of Indian manufacturers say that prices have not yet hit rock bottom and there is still a probability of price corrections in coming days. However, the remaining 33% believe that prices have bottomed out.

Manufacturers based in these 8 states highlighted that dwindling demand from finished steel market is the major factor of decline in billet prices, followed by weak global sentiments and high billet production.

Where do You See Billet Prices in Next 3 Months?

When asked about the scope of billet prices in next 3 months, 58% of manufacturers anticipate that prices will either stabilize at current levels or gain by over INR 500/MT in the duration. While, 42% expect for price correction of more than INR 500/MT.

billet 2

Current Domestic Billet Price Scenario

In a month’s time, MS billet prices fell upto 10.8% across major Indian markets. Price movements in major markets with monthly corrections are – Mandi Gobindgarh at INR 25,500/MT (- 3,100), Durgapur at INR 22,200/MT (- 2,700), Rourkela at INR 21,500/MT (- 2,550), Raipur at INR 22,500/MT (- 2,550), Mumbai at INR 23,600/MT (- 2,600), Chennai at INR 25,050/MT (- 1,350) and Hyderabad at INR 24,300/MT (- 700).

billet

 

Current Global Billet Sentiments

MS billet offers in Tangshan, China have gained further by 5% in this week (23 July-30 July’15). Currently, Chinese manufacturers are offering at RMB 1,840/MT, which was RMB 1,750/MT last week (prices inclusive of 17% VAT). The reason behind price hike is strict pollution norms imposed by the Chinese government in its major steel producing state, Tangshan. However, Chinese billets are still cheaper by at least USD 20-30/MT from any other country’s price.

At present, imported billet offers are assessed at USD 290/MT FoB China, USD 370/MT FoB India, USD 315/MT FoB Black Sea, USD 330/MT CNF Turkey and USD 315/MT CNF Bangladesh.

Viewing the overall scenario, SteelMint has inferred that MS billet prices are likely to fall further as there seems no likelihood of improvement in demand in coming days. Weak demand from construction segment amid severe liquidity crunch and pending projects will still hamper the finished steel business.

 
coal_India

SECL’s Domestic Coal Auction Sees another Price fall in July’15

SECL’s coal auction held on 21 and 22 July’15 fetched comparatively lower bids, domestic coal prices decline again in July’15.

South Eastern Coalfields Limited (SECL), the largest coal producing subsidiary of CIL, had conducted an e-auction for 1.10 MnT coal on 21 & 22 July’15.The auction received bids lower by INR 200-300/MT compared to previous bid prices. About 1.05 MnT coal was sold in this auction, witnessing a marginal price fall owing to buyers’ rejection to pay high prices for domestic coal. In this auction more than 50% of the quantity was fetched by top 10 bidders.

In previous couple of months, domestic e-auction prices have declined constantly, having been influenced by falling global prices, coupled with increased domestic supply of coal.

One participant mentioned, “The recent domestic auction saw a marginal fall in bid prices at INR 200-300/MT. Ongoing Indian monsoon, falling steel prices, increased domestic supply and constantly reduced global prices are the major factors deterring participating companies from paying high for comparatively low grade domestic coal.”

Big participants in the Auction

In this auction, the top 10 quantity bidders like BALCO, Jindal Power, Indermani Mineral India, DB Power, Godawari Power, JSPL etc. have bought more than 50% of coal offered.

  1. Jindal Power received highest quantity of about 0.22 MnT in this auction. The company had bid for Chhal OC (stock) Mine (0.11 MT quantity) at INR 1,378/MT for G12 size coal (3700-4000 GCV).
  2. Bharat Aluminum received total 0.10 MnT of coal from Gevra OC (stock) Mines at winning price of INR 1,160/MT for size G11 ROM coal (4000-4300 GCV) at INR 1,140/MT base price. The company has received total 107,900 MT coal from three different mines for its power and aluminum plants.
  3. DB Power bid for two different mine, 50,000 MT of Gevra OC- G11 sized ROM coal and 55,000 Mt of Chhal OC-G12 ROM coal. The company received coal at price INR 1,160/MT & INR 1,398/MT respectively from both mines.
Consignee Name Colliery Grade Qty  Floor Price Bid Price Sector
Bharat Aluminium Gevra OC(Stock) G11 Size ROM 100,000          1,140       1,160 Power
Jindal Power Chhal OC G12 Size ROM 110,000 1,068 1,378 Power
Indermani Mineral Gevra OC(Stock) G11 Size ROM 52,200 1,140 1,140 Trader
Godawari Power & Ispat Gevra OC(Stock) G11 Size ROM    30,000          1,140       1,160 Sponge Iron
JSPL Baroud OC G8 Sized ROM 37,400 2,028 2,218 Steel
Monnet Ispat Jampali OC G12 Size ROM 15,000 1,068 1,068 Sponge Iron
Agarwal Fuel Corporation Baroud OC G8 Sized ROM      6,000 2,028 2,238 Trader
Prakash Industries Bagdeva G5 SLK      6,000         2,820       3,410 Sponge Iron
Reliance Cement Bangwar UG (Bunker) G7 SLK 3000         2,292       2,292 Cement

Quantity in MT
Price in INR
Source: SteelMint

 

JSW’s Expansion Plans to Execute by Dec’15

JSW Steel’s  expansion plan to increase its crude steel production capacity from 14.3 MnT to 18 MnT by December, 2015.

 

India’s third largest steel giant, JSW Steel has recently announced that its much delayed capacity expansion plans at Vijaynagar, Karnataka and Dolvi, Maharashtra will be soon executed by December, 2015.

Vijaynagar, Karnataka Expansion Plan

10 MnT Vijaynagar works was slated for its capacity expansion by additional 2 MnT making it total 12 MnT pa in FY14. The total investment proposed in the same was INR 26.95 bn. However, due to continued iron ore shortage in India (result of mining ban in Karnataka), the plan was put on hold during the year.

The company was relying on import from Australia, Brazil, and South Africa in order to meet its raw material requirements. However, NMDC’s recent price correction in iron ore fines coupled with the Supreme Court’s announcement to lift mining ban on 15 (grade C) mines in Karnataka, iron ore availability seems to be improving. Thus, JSW Steel’s management confirmed that its long held expansion plan is slated to be completed by December, 2015.

The Vijaynagar works produces range of products such as slabs, billets, HRC, CRCA coils and sheets, wire rods and bar rods.

Dolvi, Maharashtra Expansion Plan

The Dolvi unit in Maharashtra was acquired by JSW Steel from debt-laden Ispat Steel in 2010. After its turnaround, the company in 2014 rolled out its capacity expansion plan to 5 MnT from the current 3.3 MnT with a proposed investment of INR 33 bn. As per the management, plan is on track and is expected to be completed by December, 2015.

Dolvi plant specializes in manufacturing of CRC used in automotive, industrial, and consumer durable sector.

Currently, the Indian steel industry is tussling with problems like subdued demand and cheaper imports from China, Japan, and Russia. Thus, JSW is concentrating on expanding current plants capacity rather than starting any expensive greenfield project. The company is focusing more on increasing sales in domestic market by adding value added and special products in its product mix.