Monthly Archives: December 2015

Pet Coke Prices Decline Further in India

Pet coke prices have further receded in India.

The largest producer in the country—Reliance Industries limited—has reduced its ex-work price by INR 200/MT w.e.f today. The basic price of the company stands at INR 3,500/MT.

According to inputs received from market participants, domestic purchases are likely to gain more momentum in the coming days in comparison with imports due to declining prices of domestic materials. In context to latest Pet coke procurement practice, an official of a reputed cement company told that they stopped importing and preferred domestic purchases.

On the other hand, import offers from key international markets have also remained soft. According to a leading importer, offers for Pet coke (with around 9% Sulphur Content) from Saudi Arabia have gone further down to around USD 38/MT, CFR India. While, offers for Pet coke (with 6-6.5% Sulphur content) from the US are around USD 47-48/MT, CFR India.

In the meantime, imports have continued to land at Indian ports. Low offers in the major international markets have continued to attract Indian buyers.During 13-28 Dec’15, 706,770 MT of Pet coke has reached the country’s ports, according to SteelMint research. Most of the importers were cement manufacturers, and Saudi Arabia and US were the prominent importing regions, the research shows.

The customs exchange rate has remained at INR 67.20 per USD.

 

Australian Coking Coal Prices Retrace on MIP Anticipation

Expectation of MIP on steel products is likely to surge imported raw material prices. Alongside, coking coal prices uptick due to improved demand in Chinese market.

Australian coking coal prices have incremented this week owing to improved demand in Chinese market. After witnessing continuous downfall from couple of week, prices have gone up by USD 2-3/MT for Australian PHCC. Meanwhile, Hard coking coal prices have risen by USD 1-2/MT in a week’s time.

SteelMint assessed, Australia Premium HCC offers fell by 28% in a year’s time.

Currently, Premium HCC offers from Australia are assessed at USD 83-84/ MT, CFR India against USD 81-82/MT in preceding week. While, Australian HCC prices are hovering in the range of USD 80-81/MT, CFR India against USD 79-80/MT, CFR India.

An Indian importer told to SteelMint, “There is least chance of price corrections in coming weeks. However, prices of imported material may go up due to anticipated MIP on steel products.”

Coking coal import

According to SteelMint’s latest assessment, India has already imported about 3.9 MnT of coking coal for Dec’15 against 4.2 MnT in Nov’15.

1

Qty in MnT
Grade- Coking Coal
India Imports-SteelMint Stats
China Imports-Customs
Dec’15 Imports – Till Latest Updates

 

 

Odisha Approves Formation of ‘Directorate of Steel’

Bhubaneswar: The government of Odisha has approved the formation of a Composite Directorate of Steel inline of the existing Directorate of Mines. The Directorate of Steel would be headed by a Director, a senior official in the rank of Additional Secretary. The new entity will focus on the development of steel sector in the state.

The decision was taken at a cabinet meeting chaired by the chief minister Naveen Patnaik today.

Previously, there was no separate body to track the investment proposals in the steel sector. The IPICOL under the department of Industry has been looking after investment promotion in all the sectors including the steel sector. But after drawing flak over non-starter of several big ticket steel projects including POSCO and Arcelor-Mittal, the state government has finally decided to set up a dedicated body for the sector.

Rationalisation of Long Term Linkage Policy of OMC

The state government has also approved a proposal to simplify the rules of the long term linkage policy of the OMC, after which OMC can make modifications in the policy from time to time as per the requirement.

 

KIOCL to Export First Pellet Shipment to Iran

Under Long Term Trade Agreement (LTA) with Iran, KIOCL, a leading producer and exporter of iron pellet from India, is exporting iron ore pellets to Iran.

A vessel named ‘MV Aries’ carrying 65,500 MT iron pellet, is expected to reach Mangalore Port by next week. KIOCL is currently operating 3.5 MnT pa pellet plant in Mangalore.

This is the 1st shipment under the LTA between KIOCL and Middle East countries, where KIOCL will import iron ore from them, make pellets and export them back.

In addition, KIOCL is also in talks with many Iranian companies since long time, to import iron ore from them, especially fines and export back pellet. This was one of the the part of ‘Make in India’ campaign promoted by Indian government.

As we all know that Iran, which is a potential market to India, has total DRI capacity of 24.3 MnT. Whereas, total requirement of pellets (Fe66%) to nation’s plants is much higher. So, in order to meet the shortfall, Iran is compelled to import pellets. Also, less freight and transition time have attracted Iran to purchase pellets from India.

 

Indian Secondary Rebar Makers in Hyderabad Revise Gauge Parity

Secondary rebar manufacturers based in Hyderabad have increased gauge parity for 10-25 mm by INR 200/MT and 8 and 32 mm by INR 300/MT w.e.f 31 Dec’15. Prior to this, gauge parity was revised on 18 Apr’14.

Hyderabad based steel rolling mill association in a meeting held yesterday has increased rebar gauge parity for 10-25 mm size by INR 200/MT and for 8 and 32 mm by INR 300/MT. The new parity is effective from 31 Dec’15 (today).

Steel Mint also spoke to officials of Vinayak Steel and Binju Metals rebar manufacturers based in Hyderabad stated that, There are about 15-17 rebar manufacturers in Hyderabad (Telangana), who have increased gauge parity by INR 200/MT for 10-25 mm and INR 300/MT for 8 and 32 mm w.e.f 31 Dec’15.

Rebar offers in Hyderabad by secondary players have also increased by INR 500-700/MT in a week’s time. Presently, 12 mm rebar prices in the state are in the range of INR 27,100-27,300/MT (excise duty and other taxes extra).

Historical record of rebar gauge parity in Hyderabad

Old Gauge Parity w.e.f 8 Feb’14

Old Gauge Parity w.e.f 18 Apr’14

New Gauge Parity w.e.f 31 Dec’15

Base price = 20 mm Base price =28 mm Basic price =28 mm
8,28,32 mm = Basic+2,500 8,32 mm = Basic+2,500 8,32 mm = Basic+2,800
10,12,16, 25 mm = Basic+1,500 10,12,16,20,25 mm = Basic+1,500 10,12,16,20,25 mm = Basic+1,700

Gauge parity in INR/MT
Source: SteelMint Research

 

Indian Government Cuts Import Duty on Korean HRC under FTA

As per the notification released by Ministry of Finance dated 30 Dec’15, the customs duty on HRC imports from Korea has been reduced to 0.63% from 1.25% under Comprehensive Economic Partnership Agreement (CEPA), which is a part of bi-lateral trade agreement between India and Korea.

“In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Indian government in the Ministry of Finance (Department of Revenue), No.152/2009-Customs, dated the 31st December, 2009, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 943 (E), dated 31 Dec, 2009.”

India had entered in to bilateral FTA for eight years with Korea and Japan in 2009 and 2011 respectively. Under FTA, duties on most of the products, traded between the two countries are reduced to zero in phases.

However FTA with Korea and Japan has added to the woes of Indian steel industry as steel imports from both the countries have increased drastically in last one year.

As per JPC data, India’s total steel imports from Korea increased by about 70% from 1.19 MnT in Apr-Nov’14 to 2.01 in Apr-Nov’15. Whereas imports from Japan increased by 66% from 0.93 MnT in Apr-Nov’14 to 1.54 MnT in Apr-Nov’15.

Indian steel industry has been lobbying hard since long to keep steel out of FTA agreements with Japan & Korea.

Limited Impact of reduction in Duty

Domestic steel market is abuzz with the talks of Minimum Import Price (MIP) likely to be imposed on steel very soon.

Owing to this Indian importers have stalled their import bookings and currently no new offers are being heard from Korea/Japan.

Under MIP a floor price would be decided by the government below which imports would not be allowed in to the country. Duties will be imposed on decided MIP.

Year-wise Import duty on Korean HRC Imports under FTA

Year Duty
2009 4.38%
2010 4.38%
2011 3.13%
2012 2.50%
2014 1.88%
2015 1.25%
2016 0.63%

Source: SteelMint Research 

 

Billet Market Heads for Fourth Weekly Gain

Indian MS billet market this week has shown a sharp recovery in prices by INR 900-1,600/MT across major markets.

This week, domestic billet market has headed for 4th weekly gain as prices have jumped by INR 900-1,600/MT W-o-W. Billet makers have found support on the backdrop of expected imposition of MIP on steel products coupled with improvement in finished steel buying in domestic market.

Major hike has been seen markets including Durgapur (+1,650) and Rourkela (+1,450), followed by Raipur and Mumbai (+1,200). Current MS billet offers for size 125*125 mm are prevaling at INR 22,700/MT ex-Durgapur, INR 23,300/MT ex-Raipur, INR 24,700/MT ex-Mumbai and INR 24,400/MT ex-Hyderbad.

Meanwhile, sponge iron prices have also gained by INR 800-1,000/MT across all Indian regions. It has been learned from sources that market trade volume may remain weak in coming days due to new year celebration holidays. Market will get further direction only after 4 Jan’16 (Monday).

MS billet prices as on 31 Dec’15

Particular Prices D-o-D
Ex-Mandi Gobindgarh 25,700 +100
Ex-Durgapur 22,700 +200
Ex-Rourkela 22,050 +250
Ex-Raipur* 23,300 +300
Ex-Goa 22,800   0
Ex-Jalna 24,600 +300
Ex-Mumbai* 24,700 +450
Ex-Chennai 22,950   0
Ex-Hyderabad 24,400 +400

Prices in INR/MT
Source: SteelMint Research

billet

 

Spot Iron Lump Premium Rise by 25% W-o-W

Continuing the uptrend of last week spot iron lump premium has moved up further by 25% this week.

Spot iron lump premium has increased by USD 0.0125/dry MT unit this week. Lump premium for Fe 62% was assesed at USD 0.0625/dry MT unit today i.e. 31st Dec’15.

Lump premium was last seen at this level towards end of Oct’15 after which it observed a downtrend.

Global iron ore prices have also gained strength in last couple of weeks over increase in rebar prices amid short supply. Iron ore stock at Chinese ports remained stable in last week of Dec’15 and stood at 95.8 MnT as on 25 Dec’15.

However market participants expect that iron ore prices might remain high probably till mid of Jan’16 and then experience a downturn again owing to shrinking steel output.

China’s crude steel output is expected to fall for 2nd year in a row in 2016. As per annual report of Metallurgical Industry Planning and Research Institute (MPI) production would fall 3.1% percent to 781 MnT in 2016. This will lead to reduction in iron ore consumption by 4.2%.

 

German Company Ecotec Floats Tender for Purchase of 50,000 MT Stainless Steel

Ecotec Consulting GmbH, headquartered in Krefeld, has published a tender on behalf of Government of Germany for procurement and delivery of 50,000 MT stainless steel of various grades.

Contract notice

1. Conclusion of a multiannual framework for the procurement of Vertages Noble steel.
2. The service contract is for 60 months.
3. The total quantity need to supply is 250,000 MT in 5 years.
4. The contract duration will begin from 1 Apr’16 to 31 Mar’21.
5. The main location of execution, delivery or performance is Hamburg and/or Antwerp.
6. The notice involves the establishment of a framework agreement.
7. The duration of framework agreement is 5 years with a single operator.
8. Estimated value for the entire duration of the agreement is 500,000,000 EUR excluding VAT.
9. The contract is not divided into lots.
10. Alternative items/variants will be accepted.

Tender schedule

Bid submission due date: 29 Jan’16 at 12:00 hrs

 

49% Iron Ore Sold in OMC’s Iron Ore E-auction

Odisha Mining Corporation (OMC) has recently conducted an e-auction for 195,000 MT iron ore (120,000 MT fines & 75,000 MT lump) on 30 Dec’15. The company had received moderate responses in the e-auction as almost 49% of the material offered in the e-auction was sold.

This time, the company had reduced the base prices by upto 28%. The material was offered from Gandhamardan and Koira mines and sold at base prices itself.

Out of the total material offered from Gandhamardan mines, majorly 15,000 MT Fe 65% 10-180 mm lump and 80,000 MT fines was sold from Gandhamardan mines. As per sources, CLO offered from Gandhamardan mines was basically procured by sponge manufacturers and fines were majorly procured by Rashmi Metalliks and few traders.

On the other hand, 20,000 MT low grade fines were offered from Koira mines. However, due to some reasons, the lot offered from Koira mines was called off. As per sources, the material offered form Koira mines will be again offered in the next e-auction to be conducted within 15 days.

Result of OMC iron ore e-auction held on 30 Dec’15  

Mines

Size (mm) Fe (%) Base Price
on 30 Dec’15
Quantity
Offered

Quantity
Sold

Gandhamardan 10-180 65 1,500 25,000 15,000
10-40 62 1,750 50,000 1,000
-10 62-60 900 100,000 80,000
Koira Mines -10 56-52 350 20,000
Total

96,000

Quantity in MT
Base & bid prices in INR/MT on ex-mines basis; including of royalty
Source: SteelMint Research