Monthly Archives: November 2016

Higher Raw Material Cost of Production Boost Domestic Plate Prices

Recently, Indian  manufacturers  have  raised  the  flat  products  prices  by  INR  1,500-2,000/MT  which  also  includes  HR  plates  prices. Flat  product  prices  are  constantly  rising  on account  of  higher coking  coal  prices.

Current  offers  of  HR Plate  (ex-mill)  are  hovering  in  the  range  of  INR 33,500-34,000/MT.  Whereas  offers  from  ex-Mumbai  and  ex-Delhi  are  heard  to  be  in  the  range  of  INR  40,000/MT.

The  price  rally  in  coking  coal  and  iron  ore  prices  are  constantly  moving  upwards  which  has  led  to   rise  in  flat  products  prices.  However, traders  and  stockiest  are  anticipating  that  the  hike  in  flat  product  prices  will  be  accepted  by  the  market.

As  the  old  inventories  are  on  the  verge  of  completion  therefore  increased  buying  activities  may  show  a  sign  of  positive  sentiments  which  might  lead  to  further  rise  in Plate  prices.

Although  Indian  government  has  imposed  safeguard  duty  on  24  Nov’2016  due  to  which  imports  of  HR  plates  are  highly  restricted  providing  enough  scope  to  the  manufacturers  to  raise  the  plate  prices.

Global Offers:
China  plate  export  offers  shown  uptrend  this  week  amid  gains  in  the  domestic market.  Current export  offers  of  HR plate  are  heard  to  be  in  the  range  of  USD 455-465/MT, FoB  China.

Although, Chinese  market  remain  volatile  as  the  situation  of  stalemate  prevails  between  buyers  and  the  sellers. By  far  no  major  deals  are  concluded  yet.  However  drop  in  paper  market  may  lead  to  decline  in  plate  export  offers.

Hence , increased  cost  of  production  is  supporting  higher  export  offers  but  it  is  anticipated  that  uncertainty  in  Chinese  market  might  lead  to  fall  in  export  offers.

CIS-origin  plate  export  offers  are  assessed  in  the  range of  USD 450-455/MT, FoB  Black sea.

Besides  this,recently SAIL (Steel Authority of India)  has  concluded  the  deal  which  is  in  the range  of  USD  470-475 ,FoB  India .
screenshot-from-2016-11-30-183358hr

 

 

Large Indian Steel Makers to Raise Long Product Prices up to INR 1,500/MT for Dec’16: Sources

Steel Mint has heard from the market sources that large Indian steel makers are most likely to increase the prices of long product by INR 1,000-1,500/MT for Dec’16 deliveries.

Currently, rebar offers by large steel producers are in the range of INR 35,000-35,500/MT (including excise duty, CST, VAT extra) for Punjab region.

The prime reason behind the sharp increase in steel prices is because of sudden increase in coking coal prices for the last few months in the international market.

Almost large Steel makers like SAIL, RINL, Tata steel, JSW steel and JSPL are largely relying on imported coking coal.

On a monthly average basis, Australia premium coking coal prices which was at USD 118/MT during Aug’16 is now reached to USD 308/MT in Nov’16, now it has increased by USD 190/MT.

As per the market participants, the cost of steel production is certainly going to rise in the range of INR 4,000-5,000/MT of all large steel producers and they are planning to pass the same cost to their consumers partially.

On the demand side, domestic steel producers are facing extreme sales pressure especially after the government move for demonetization.

A well know dealer based in North India also shared that,” As it is heard that SAIL may announce increase of long product prices by INR 1,000-1,500/MT in early Dec’16″.

graph

Note: Prices are basic & consider to be large steel producers like SAIL, RINL, Tata Steel

 

Indian Power Plants Coal Stock Rise by 49% Y-o-Y

Indian Thermal power plants coal stock level have increased by 49% on yearly basis. Coal stock at power plants stood at 38.9 MnT (as on 31 Mar’16) which was at 26.1 MnT (as on 31 Mar’15) during the same period of last year. While, the available stock is sufficient to fulfill about 27 days of requirement at plants.

However, at present ample coal inventory is available in thermal power plants which is about 12.8 MnT more than previous year.

Subsidiary-wise coal production and offtake by CIL

Company FY17 (Apr’Oct’16) FY16 FY15 FY14
Prod. Offtake Prod. Offtake Prod. Offtake Prod. Offtake
ECL 19.6 23.3 40.2 38.6 40.0 38.5 36.1 36.3
BCCL 19.5 19.1 35.9 36.1 34.5 33.7 32.6 34.2
CCL 28.1 30.4 61.3 59.6 55.7 55.3 50.0 52.1
NCL 43.0 44.7 80.2 78.5 72.5 73.7 68.6 72.1
WCL 17.5 19.4 44.8 42.3 41.1 41.2 39.7 39.9
SECL 71.1 73.8 137.9 138.7 128.3 123.2 124.3 122.0
 MCL 74.7 81.0 37.9 140.2 121.4 123.0 110.4 114.3
NEC 0.1 0.4 0.5 0.3 0.8 0.7 0.7 0.6
CIL 273.6 292.2 538.8 534.5 494.2 489.4 462.4 471.6

Source: Ministry of Coal
Quantity in MnT

Imported Coal Supply by CIL
CIL have been supplied imported grade coal to power utilities under the provisions of new FSA (Fuel Supply Agreement). As per the presidential directives, CIL gave option to the power plants to opt imported coal and receive a part of the Annual Contracted Quantity (ACQ) through CIL (viz. 15% of ACQ up to 2014-15, 13% of ACQ in 2015-16 and 5% of ACQ from 2016-17 onwards).

cil-yearly-coal-production-and-offtake

Cost Plus basis Coal Supply
Since FY 15, Coal India has started to supply imported coal to thermal power plants (TPP) under cost plus basis (cost of imports plus additional charges). In this CIL have been supplying imported coal to the (willing) thermal power plants. In last two years under FSA Coal India had supplied to 3 TPPs in FY15 and 3 TPPs in FY16. Accordingly, CIL had imported 0.48 MnT coal with sales value INR 3.33 billion in FY15 and 0.36 MnT with sales value of INR 1.64 billion in FY16. But for the current fiscal (FY17), none of the TPPs have opted for supply of imported coal through CIL.

Coal Block Allocation
The coal ministry have allocated about 83 coal mines to private and public sector under the provisions of the coal mines (Special Provisions) Act 2015. So far, a revenue of INR 27.8 billion has already generated and being transferred to the respective state Governments where the coal mines are located.

 

Factors to Decide Indian Iron Ore Prices for Dec’16

NMDC revised iron ore prices yesterday in which the miner increased iron ore fines prices by INR 100/MT and kept lump prices unchanged. However Odisha based merchant iron ore miners are yet to take a call on prices.

Market participants reported less iron ore trade activities post demonetization. Amid cash crunch, buyers have reduced inquiries.

Few market sources shared that not much revision in Odisha iron ore prices is expected in the first half of the coming month, however if sponge iron prices increases further, iron ore prices in Odisha may also move up.

Key highlights that will govern iron ore prices for Dec’16 –

1. C.G. based sponge plants’ iron ore sourcing stable in Nov’16 – C.G. based sponge units procured 60 rakes of iron ore from NMDC (C.G.) till 28 Nov’16. In Oct’16, they had sourced 65 rakes.

2. JSW Steel’s iron ore sourcing from NMDC (C.G.) – JSW Steel, Dolvi has procured 39 rakes in Nov’16 (till 28 Nov’16). Last month it had sourced 42 rakes.

3. Global iron ore prices retreat after hitting USD 80/MT mark – Global iron ore fines (Fe 62%) index touched USD 80.2/MT, CFR China. But yesterday prices fell amid weaker sentiments in China’s steel market. Today prices dropped to USD 72./MT, CFR China.

4. Domestic sponge iron prices gain strength in later half of Nov’16 – Sentiments have slowly started picking pace after sponge prices fell immediately in line with currency demonetization. Presently sponge iron price movements are as follows: Durgapur (78 FeM) – INR 13,800/MT del, Ex-Raipur (80 FeM) – INR 14,400/MT, Ex-Bellary (78 FeM) – INR 13,850/MT.

5. Finished steel producers hike prices significantly – Major finished flat producers have announced hike in prices by INR 1,500-2,000/MT w.e.f 01 Dec’16. High coking coal prices continues to drive up finished steel prices. HRC prices in Mumbai are assessed at INR 40,000-41,000/MT and CRC prices are seen hovering in the range of INR 43,000-44,000/MT. (Prices inclusive of excise duty @ 12.5%).

6. Prevailing dull demand in domestic pellet market – Domestic pellet prices in India remained stable across all major market except western India where they moved up in line with global iron ore prices. Pellet makers continue to see export as potential market amid better realizations and dull domestic buying interest.

 

Indian Ferro Chrome Prices Set To Rise Again on Higher Tender Prices

SteelMint weekly assessment for grade 60% is around INR 103,000/MT (Ex-Odisha). However, Indian producers are not keen on selling material in the domestic market, due to unfavourable payment terms and the risk associated with it. Moreover, demand has vanished from the domestic market, due to the recent demonetization of currency notes, resulting in a cash crunch in the economy – tying the hands of the potential buyers.

China on the other hand is looking to buy more of Indian Ferro Chrome. The cost of production of the material is quite high in China, which is directing them towards Indian Ferro Chrome. Yesterday, Chinese major Baosteel Stainless had increased its tender price by RMB 1,300/MT due to limited supply of material. As was expected that Ferro Chrome prices could rise further once the Stainless Steelmills in China, released higher purchase tender prices for the month of December. Indian producers revealed to SteelMint that the Chinese are giving buying indications at 122-123 cents/lb. Whereas, Indian producers are holding back from transactions, and are confident that a price of 125 cents/lb for Ferro Chrome (60% Cr) will soon be acceptable to the Chinese buyers.

SteelMint assessed that Indian producers are not amiable to selling at lower prices, as Chrome Ore prices have witnessed a sharp rise, and demand from China is showing no signs of a downturn.

 

Korea: KOEN Tender for Purchase of 30,000 MT Anthracite Coal

Korea South-East Power Company Limited (KOEN) has published a tender for purchase of 30,000 MT anthracite coal for KOEN power plants, Republic of Korea. Bidders are requested to offer minimum 20,000 MT quantity with shipping tolerance.

The delivery of the material is scheduled on Dec’16 to Jan’17 and the offer price shall be single fixed price based on CFR.

The offer validity is for the period of 15 days from the date of tender closing. KOEN can request the bidder to extend validity period of bid, if necessary.

Specification

Total moisture (as received basis): 15% max
Ash (air dried basis): 30% max
Sulphur (as received basis): 0.7% max
Net calorific value (as received basis): 5,800 kcal/kg min
Nitrogen (dry ash free basis): 2.0% max
Ash fusion temperature: 1,200°C min

Due date (Korean Standard Time)

The due date for submitting tender document is 6 Dec’16 till 14:00 hrs.

 

Coking Coal Import Offers Continue at Highs, Downward Correction Likely Next Year

Supply tightness and strong demand have continued to keep Coking Coal import offers at highs, with market participants speculating no downward correction at least within this month.

The latest import offers of the Premium HCC are assessed at around USD 316.95/MT CFR India; and that of the 64 Mid Vol HCC at around USD 284.8/MT CFR India.

Australian sellers have quoted these offers at: USD 306.25/MT and USD 274.1/MT respectively on FoB Australia basis.

In the meantime, there are indications of supply getting better by the next year. South32, the Australian mining major, is likely to acquire more Coking Coal mines, after the recent acquisition of the Metropolitan coal mine, of Peabody Energy.

Besides, a section of market participants foresee the prices correcting by the next year on account of possible betterment in supply.
cokingcoaloffers

Source: Market Participants

IMPORTS

During the 1-28Nov’16 period, 3.5 MnT of Coking Coal was imported into India, data collected by CoalMint Research shows.

 

MCL Earmarks INR 20,000 Crore to Ramp Up Business

Mahanadi Coalfields Limited (MCL) has earmarked an investment of INR 20,000 crore in the next four years to ramp up its business activities, which will include: enhanced coal mining and evacuation, strengthening of infrastructure, and foraying into power generation.

The largest subsidiary of Coal India Limited (CIL) however has concerns over failing to meet its production target in the current fiscal, mainly due to hurdles posed by land acquisition constraints and delay in obtaining statutory clearances.

During FY16, MCL had produced 137.8 MnT of coal.

 

Indian Ship Breaking Decreased by 43% in Nov’16

The number of ships arriving for demolition in Alang (Gujarat) have declined by 43% in Nov’16.

Total 17 ships have arrived to Alang in November , which were 30 ships in the month of Oct’16 and 22 ships in Sep’16. As per Nov’16 Total 169,229 LDT had arrived, while the total tonnage this year till now is 30,97,140 LDT in comparison to 2015 that is 17,61,520 LDT.

There are still 8 ships waiting for breaching for this month and 1 vessel is expected to arrive.

Due to rising price of raw material and steel in domestic market the Ship breaking prices in Indian market increased by INR 100-500/MT M-o-M and currently hovering in the range of INR 18,000-20,200/MT.

The imported scrap offers in the month of November increased by USD 43/MT M-o-M. Also the billet prices have increased by INR 2000/MT in south India during this month.

ship-breaking

Global Ship Breaking Price Sentiments

As per custom report, ship breaking trade in India declined by USD 10/MT (general cargo) and due to ongoing meeting and inspection in Pakistan the market is closed & price have declined by USD 5/MT (general cargo) in week 49. However, Bangladesh remained stable as last week.

In India, prices are assessed at USD 260/lt Ldt for general cargo and USD 290/lt Ldt for tanker.

Global ship breaking prices (in USD/lt Ldt) in week 49

Country General Cargo W-o-W Tanker W-o-W
India 260 -10 290 0
Bangladesh 280 0 310 +10
Pakistan 275 -5 305 +5
China 210 +5 220 +5
Turkey 200 0 210 0
 
Purchase of Silico Manganese

SAIL Tender for Purchase of 41,850 MT Silico Manganese

SAIL has invited a tender from indigenous manufacturers for tentative purchase of 41,850 MT silico manganese for its different plants.

Steel Authority of India Limited (SAIL) is the India’s largest steelmaker and produces a variety of steel and iron products, had invited a tender for purchase of total 60,940 MT (tentative quantity) silico manganese in two cycles of 3 months each. The first cycle procurement is completed by the company and now they released the tender for second cycle procurement of quantity 41,850 MT for its different plants/units.

Tentative quantity of silico manganese

Market

SAIL’s Plant Size 
(mm)
Packing Quantity for
 6 months
period (MT)

Quantity for 3 
months (2nd Cycle)
period (MT)

Market 1 Bhilai Steel Plant
(BSP)
10-50 1 MT HDPE
Jumbo Bag
25,440 13,000
Bokaro Steel
Plant (BSL)
40-100 Loose 4,400 4,000
Durgapur Steel
Plant (DSP)
25-50 Loose 14,000 12,200
IISCO Steel Plant
(ISP)
25-50 1 MT HDPE
Jumbo Bag
16,800 12,500
Alloy Steel Plant
(ASP)
10-30 1 MT HDPE
Jumbo Bag
300 150
Total 60,940 41,850

Chemical specifications

Manganese: 60.0% min, Silicon: 15.0% min, Carbon: 2.0% max, Phosphorous: 0.35% max and Sulphur: 0.03% max

Tender schedule (IST)

The due date for bid submission and and techno-commercial opening is scheduled on 13 Dec’16 at 13:00 hrs and 16:00 hrs respectively.

Result of 1st Cycle Procurement

The first cycle procurement was conducted on Sep’16 for the tentative requirement of 30,470 MT silico manganese. The following parties had successfully submitted the bid and got awarded by SAIL through reverse auction for its different plants.

Company Quantity (in MT) Price (INR/MT)
Vandana Global (Raipur) 3,000 59,100
Maithan Alloys (Kalyaneshwari) 2,550 60,000
Sarda Energy (Raipur) 3,450 61,000
Nilkanth Ferro (Durgapur) 2,550 55,800
Castron Technologies (Jharkhand) 2,554 64,985
Berry  Alloys (Andhra Pradesh) 3,800 58,000
Sova Ispat Alloys (West Bengal) 2,544 60,000
Lalwani Ferroalloys (Kolkata) 6,000 59,500

Source: SteelMint Research

The given prices are inclusive of excise duty, VAT, entry tax, inland trade and freight.

Domestic Silico Manganese market updates

The demand for silico manganese plummeted hugely post demonetization leading to a plunge in its sales volume.

The producers of silico manganese are facing a huge challenge amid severe liquidity crunch due to the demonetization of the currency leading them to reduce production substantially or shutdown their operations temporarily, as market conditions are unfavorable with no signs of improvement in the horizon.

The rise in production cost coupled with the very poor demand for silico manganese in the market, has made it almost unviable for silico manganese producers to operate at present.