Monthly Archives: October 2015

Flat Steel Market Scan

October Happenings

HRC

1. Domestic HRC prices increased by INR 500/MT in first week of October followed by safeguard duty announcement on 15 Sep’15. However prices retreated to the previous levels giving up to the pressure of cheaper import offers from China. After this single price movement, HRC prices remained stable throughout the month.

2. Imported offers from China dipped by USD 10/MT whereas offers from Korea/Japan registered a fall of USD 10-15/MT amid sluggish demand and oversupply.

3. Current offers for 2.5 mm HRC is being assessed at INR 32,500/MT (ex-Mumbai; including excise of 12.5%), USD 285/MT from China, USD 325-330/MT (from Korea/Japan). All prices are on CNF India basis.

4. HRC Imports were recorded at 98,370 tonnes from 1-17 Oct’15.

CRC

1. Domestic CRC prices registered fall in the range of INR 300-500/MT in October. Imported offers from China fell by USD 10-15/MT whereas offers from Korea fell drastically by USD 70/MT from Korea.

2. Post safeguard duty, there has been surge in CRC imports from China, Japan, and Korea. India’s total CRC imports during 1-17 Oct’15 were 44,708 MT and the highest quantity was booked from Korea, followed by Japan and China.

3. Current domestic offers for 0.9 mm CRC is INR 36,500/MT (ex-Mumbai; including excise of 12.5%i). Imported offers from China is at USD 290/MT, from Indonesia at USD 310/MT and from Korea at USD 330/MT (all prices on CNF India basis).

Plates

1. Domestic 5-10 mm plate prices reduced by INR 1,000/MT. Imported prices from China fell by USD 10/MT while POSCO (Indonesia) offers fell by about USD 20/MT.

2. Domestic offers for 0.9 mm plates are being assessed in the range of INR 26,500-27,000/MT (ex-works, excluding excise).Imported offers for commercial grade (A36) plates is being assessed at USD 290-295/MT from China, USD 310-320/MT from Indonesia, and USD 330/MT from Korea. All prices are on CNF India basis.

3. India’s integrated steel manufacturers have filed petition with DG Safeguards for safeguard duty on hot rolled plates.

Future Outlook

1. Imported and domestic flat steel prices are likely to fall in November however in the long run prices are likely to stabilize. This is because 20% production cut is anticipated in China which is likely to control its oversupply. Also raw material, scrap prices in international market are gaining momentum which will probably move flat steel prices in upward direction.

2. DG Safeguards (DGS) had issued a notice to hold public hearing on HRC safeguard duty case on November 16, 2015 at 10 am in New Delhi. It had been notified that all the interested parties can participate in the public hearing.

 
MS Billet_Prices up

Indian Semis Market Remains Bearish in Week 44

Domestic semi finish market in week 44 remained bearish with minor price corrections and it is expected that prices may find support at current levels. Sponge iron prices declined slightly by INR 100-300/MT. While, billet market witnessed a sharp price corrections of upto INR 850/MT in domestic market.

Meanwhile, Pig iron prices remained stable across India, except in Raipur as prices corrected by INR 450/MT in a week.

Week 44 highlights

1. C-DRI prices in Rourkela were assessed at INR 13,000/MT (78 FeM; NA), Raipur at INR 11,650/MT (80 FeM; -100) and Bellary INR 12,800/MT (78 FeM; -300).
2. P-DRI prices across major markets are in the range of INR 11,300-13,400/MT.
3. Billet offers are assessed in Durgapur at INR 20,600/MT (NA), Rourkela at INR 19,900/MT (-850), Raipur at INR 20,600/MT (-250), Mumbai at INR 21,900/MT (-800), Chennai at INR 22,200/MT (-450) and Hyderabad at INR 22,000/MT (-700).
4. Odisha miners reduced iron ore lump prices by INR 200-300/MT. While, fines prices remained stable.
5. Imported scrap offers remained stable due to limited trade activities.

Week 45 outlook

1. Semis prices are expected to remain range-bound.
2. NMDC may reduce iron ore lump prices by INR 300-500/MT and fines by INR 200-300/MT, as per market participants.
3. Imported scrap prices may remain firm at current levels.

 
Ferro Manganese

Weak Demand Curtails Ferro Manganese Market

HC ferro manganese market remained quiet as prices are under pressure amid a dearth of buying interest.

In the domestic market ferro manganese prices are down as supply glut and slack demand combined to pull down tradable levels. Sources continue to cite sluggish steel fundamentals stopping buying interest and hence ferro alloy market is weakening. Looking at the market condition a producer from Raipur stated, “Demand is so bad that producers are compelled to reduce their offers just to induce some buying to reduce stocks.”

Current price for ferro manganese 70% min is INR 41,000/MT (Ex-Raipur) and INR 41,500/MT (Ex-Durgapur).

Export Offers Unchanged on Lackluster Demand

Ferro manganese export offers are unchanged W-0-W amid slack buying appetite.

Export offers for HC ferro manganese 70% min. is at around USD 640/MT FoB India (East-coast) and 75% min is being offered at around USD 680 /MT FoB India.

Ferro manganese consumption keeps going down, and there is no reason for it to go up. Demand is coming down day by day. There is no better day in the foreseeable future,” remarked a producer from India.

In view of ailing steel market SteelMint assessed that the future outlook for ferro manganese is not positive.

Exchange Rate: USD 1 = INR 65.4

 

Stable Bulk Freight Rates Continue to Rule

Bulk freight rates have continued to remain stable this week.

The stability has persisted as demand did not undergo any improvement. Shipping freight rates are assessed this week in the range of USD 6-12/MT.

Demand for commodities has remained uniformly low as a result of weak global economies, leading to slight stability in shipping freight market. Besides, excess vessel capacity and intense competition among shipping companies have also contributed considerably to the lackluster freight market.

Soft crude oil prices have also played a decisive role in sustaining inactive freight rates. Crude oil prices are decisive parameters in influencing freight rate movements and prices were reported at USD 44.34/barrel on 29 Oct’15.

Crude oil prices vs. vessel freight rates

Month

Crude Oil Price

Vessel Freight, Indonesia to India

Jul’14

105.61

9

Aug’14

100.75

8.50

Sep-14

95.98

9.10

Oct’14

85.06

8.70

Nov’14

75.57

9.90

Dec’14

59.46

8.60

Jan’15

44.38

5.50

Feb’15

54.06

6

Mar’15

52.46

6.70

Apr’15

57.3

6.50

May’15

62.16

6.10

Jun’15

60.21

7.20

Jul’15

54.19

7.10

Aug’15

45.46

6.30

Sept’15

44.48

6.30

Oct’14

44.34

6

Panamax Vessel prices in USD/MT
Oil prices in USD/barrel
Source: OPEC, Coalspot

Commenting on the prevailing freight market, personnel in a reputed shipping company in South India said that he expected some improvements in bulk freight rates towards the end of this year.

 

 

 

 

 

 

 

 

South African Coal Offers Inch Up on Low Availability

After experiencing a constant downfall since a year, now South African coal market witnessed a marginal rise of USD 2-3/MT for Dec’15 deliveries.

Low availability of South African coal has supported prices to inched up by around USD 2-3/MT W-o-W. India’s most preferred grade for DRI units, South African origin RB2 is being offered at USD 51-52/MT, CFR East Coast India for Nov’15 loading.

After a marginal rise, current offers of 5500 NAR coal are assessed at USD 52/MT, USD 51/MT and USD 50-51/MT, CIF India at Dhamra, Paradip and Haldia ports respectively for Dec’15 deliveries.

South African coal index for 6000 NAR (API4) has also reached to USD 51.5/MT, FoB Richards Bay today for Nov’15 loading, which was USD 49/MT a week ago.

An official from one of the biggest coal trading firm in India highlighted, “At present, market is bearing lack of cargo availability for current loading as South African big miners have already booked for Dec’15 shipments. In addition, continuous production cut in the country has resulted in scarcity of South African coal for now.”

He further added, currently India is also eyeing on Russian 5500 NCV Thermal coal amid very competitive price and prime quality compared to its conventional sources.

South African Coal

Stock and sell offers are at the same level as a week ago at INR 4,100-4,300/MT (all duties and clearance included, VAT & CST will be added further) at all Indian ports.

Indian sponge market

India is the largest destination for South African coal as most suitable for DRI units. On one hand, South African global offers have raised after a long time, on the other, coal demand is still subdued in India owing to depressed sponge market.

Sponge prices have declined to INR 2,000/MT M-o-M and corrected around INR 1,000/MT in last 10 days. In the current week, prices have fallen by INR 300/MT (78-80 FeM C-DRI) in central east India.

At present, India is highly focused to import high GCV material due to increase in availability of lower grade domestic coal, which requires good quality imported material for blending.

 

 

Indian Pellet Sponge Prices may Find Support – Reports

Indian sponge industry is currently suffering with low conversion gap as conversion spread from iron pellet to pellet sponge (P-DRI) fell below INR 8,000/MT levels; narrowed by INR 1,000/MT M-o-M. This situation happens due to sharp fall in lump prices, which led to continuous decline in sponge iron (C-DRI) prices in domestic market. Whereas, iron pellet offers fell marginally.

In a month, C-DRI prices in Raipur and Durgapur fell by upto INR 2,200/MT due to persistent downfall in iron ore lump prices. While in same period, P-DRI declined by upto INR 900-1,600/MT.

“We require a minimum conversion spread of INR 8,500-9,500/MT to produce 1 MT of P-DRI from 1 MT iron pellet, which is currently narrowed down to INR 7,500/MT. Thus, we have reduced our production”, mentioned a Raipur based large sponge maker.

“Pellet sponge production in Durgapur has reduced sharply due to low profit margins. Thus, many plants have shifted towards iron ore of Odisha mines”, shared a Durgapur based sponge maker, who regularly buy pellet sponge from Odisha.

sponge

 
SAIL Invites Tender for Mixed Coke

SAIL to Auction 6,000 MT Pig Iron

Steel Authority of India (SAIL), India’s largest steelmaker, is conducting an e-auction for Pig iron (basic grade) from PCM-I and PCM-II on As-is-Where-is and No-complaint basis. The total quantity is 6,000 MT in 30 lots.

The bidding will be in INR/MT (only basic price), excluding 12.5% excise duty and sales tax. In addition, 2% CST against ‘C’ form / 5% VAT and 1% entry tax extra for inside state of Odisha will be applicable. Mode of delivery will be via road and rail.

The e-auction is scheduled on 3 Nov’15 at 14:00 hrs. If the event of auctions continue beyond 6.00 pm, the same will be paused and will be continued next working day.

 

Gopalpur Port Ready for Operation

The Gopalpur port, which was closed after the severe cyclone Phailin in Oct’13, is ready to start operation. Resumption of port operation is important due to its proximity to Tata Steel’s Gopalpur SEZ. The company has already shown interest in using the port for its cargo handling.

“The repairing work of the port damaged during the cyclone Phailin has been completed. The berths, break water and several other parts of the port are ready to commence operation. We are hopeful to start operation within a fortnight subject to getting few statutory clearances by the government authorities”, said Manmohan Moharana, director (operations) Gopalpur Port.

Prior to the cyclone, the port had operated for a short period of 6 months only. Meanwhile, the berth, which was 150 m before the catastrophe, is being extended to 275 m. Recently, an expert committee made an inspection of the port and examined several aspects of the port including the berth, jetty, customs department etc.

 

Chinese Rebar Export Offers Down USD 3/MT W-o-W

UAE imported rebar offers have risen by USD 5/MT. While, Turkey export offers remained stable in a week.

China’s rebar export offers have fallen slightly by USD 3/MT W-o-W. Shrinking domestic demand in China has forced steel mills to cut rebar offers continuously.

Since starting of the current year, export rebar offers have been falling sharply by 33%. Offers were assessed at USD 400/MT in the 1st week of Jan’15, which currently stood at around USD 267/MT.

The most traded Jan rebar contract on the Shanghai Futures exchange has fallen by 0.6% today as compared to previous day and it is closed at RMB 1,782/MT (USD 280/MT).

Meanwhile, Turkey export rebar offers remained stable as imported scrap offers have shown improvement in the same period by USD 5-10/MT. Whereas, UAE imported rebar offers increased by USD 5/MT.

Global rebar offers as on 30 Oct’15

Country-wise Offers in USD/MT W-o-W
China export main port FoB 267 – 3
CIS export FoB Black Sea 305 – 5
Turkey Export FoB main port 317 0
UAE import CFR Jebel Ali 329 + 5
India (ex-works Mumbai) 392 – 8

USD 1 = INR 65.29
Source: SteelMint Research

china

 

Shredded Scrap Offers to India Stable on Limited Trade Activities

Indian buyers have shown resistance for imported scrap due to consistently declining steel prices in domestic market. Indian steel prices have observed a downfall of around INR 1,500-2,500/MT (USD 23-38) during October.

Market participants mentioned that current offers for Shredded scrap (ISRI 211) from Europe are assessed at USD 195-200/MT, CFR Nhava Sheva port. Whereas, US Shredded scrap offers are assessed at USD 190-195/MT, CFR Nhava Sheva.

“Buying interest remained muted due to sharp fall in domestic prices. Despite limited sellers in the market, buyers are unwilling to take position. Current offers for Shredded are somewhere in the range of USD 190-200/MT, CFR and HMS at around USD 185-195/MT, CFR India”, said an indenter based in Mumbai.

Indian scrap imports increased in 2015 owing to lower prices and rising bulk shipments from US. India imported about 4.06 MnT of ferrous scrap during Jan-Sept’15.

Trade-wise

  1. Japanese Busheling Shredded scrap offers increased to USD 220-222/MT, CFR India; no buying interest observed
  2. European Shredded scrap offers are USD 195-200/MT, CFR Nhava Sheva
  3. European Shredded scrap offers are in the range of USD 210-215/MT, CFR Chittagong Port
  4. European Shredded scrap offered at USD 200-205/MT, CFR Pakistan.