Monthly Archives: January 2017

Seven Things SteelMint Learned from JSW Steel’s Investor Conference Call

JSW Steel today reported its results for Q3 FY17. Company’s crude steel output moved up 43% Y-o-Y to 3.86 MnT in Q3 FY17. Also. Its saleable steel sales recorded increase of 43% Y-o-Y in Q3 FY17 to 3.64 MnT. In its consolidated performance, company’s operating EBIDTA was at INR 2,867 crores in Q3 FY17.

Q3 FY17 witnessed volatility and turbulence in Indian steel industry over factors like – Currency Demonetization and sharp hike in raw material prices. However company is expecting some positive move in the upcoming Budget.

Below are the key highlights that we learnt from JSW Steel’s investor conference call conducted today (31 Jan’17):

1. Provisional Anti-Dumping duty to be extended for 2 more months- Provisional Anti Dumping Duty on HRC & CRC likely to be extended for 2 months until its final determination.

2. Indian steel imports increased sharply in Dec’16 – Steel imports to India have seen substantially increased in Dec’16 by 33%,M-o-M as compared to Nov’16. Despite imposition of MIP,steel imports have gained the momentum in this quarter, following which they may analyze and request govt. for suitable measures.

3. Japan & Korea FTA Agreements under review – Regarding renewal of India-Korea Comprehensive Economic Partnership Agreement (CEPA) and Indo-Japan Comprehensive Economic Partnership Agreement, it was said that their are chances for reviewing the FTA’s.

4. Regarding inorganic growth strategies – JSW Steel is evaluating both organic & inorganic growth strategies. They will consider cost & synergy turnaround before evaluating the opportunities. There are chances that JSW Steel, Dolvi may ramp up capacity, however the same for Vijayanagar plant is difficult owing to iron ore mining cap of 30 MnT imposed in Karnataka.

5. Regarding Blended Coking coal cost – JSW Steel expects blended coking coal cost to stand at USD 220-225/MT, CFR Port in Q4 FY17 against USD 172/MT, CFR Port in Q3 FY17.

6. Indian flat steel prices increased considerably in Q3 FY17 – Domestic flat steel prices moved up by USD 30-35/MT in Q3 FY17. There are further chances of raising prices in Feb’17, however domestic demand and global prices will remain governing factors.

7. Two Karnataka iron ore blocks to become operational in Apr’17- Out of the 5 iron ore mine blocks that JSW Steel won in auctions, the company expects 2 mines to become operational in Apr’17. While other 3 mine blocks are likely to become operational in Dec’17.

 

Indian Domestic Ferrous Scrap Prices Slip Upto INR 900/MT (USD 13) W-o-W

Indian domestic Ferrous scrap prices plunged by INR 300-900/MT W-o-W and highest price fall is recorded in North & West India. Similarly, in global market offers plunge down by USD 10-15/MT, W-o-W.

HMS (80:20) scrap prices are currently at INR 18,000-18,800/MT (USD 265-278) in Western India, INR 14,500-16,500/MT (USD 213-244) South India & INR 17,500-18,000/MT (USD 258-265 ) in North India. Whereas, same grade imported scrap offers are at USD 240-245/MT CNF India (West & South coast).

Chennai based scrap supplier, stated “falling sponge & billet prices are declining domestic scrap prices.” He also added, “Global sentiments is the major factor of plunging”

In a week duration Indian sponge & billet prices fall by INR 800-1,500/MT (USD 12-22/MT).

Indian Scrap (HMS 80:20) Offers as on 31 Jan’16

Region Particulars Size/Grade Prices W-o-W
North India Ex-Mandi Gobindgarh End Cutting 21,000 -800 
HMS(80:20) 17,800 -700 
East India Ex-Durgapur HMS(80:20) 17,800 -300 
Central India Ex-Raipur End Cutting 20,500 0
HMS(80:20) 19,500 0
West India Ex-Ahmedabad HMS(80:20) 18,500 -900 
Ex-Alang HMS(80:20) 18,000 -900 
Ex-Mumbai HMS(80:20) 18,500 300
South India Ex-Chennai HMS(80:20) 16,500 -250 
Ex-Hyderabad HMS(80:20) 14,600 -400 
Global CNF India HMS-1, Middle East 255 -5 
HMS-1&2, Middle East 250 -5 
HMS-1&2, S.Africa 240 -13 
Shredded, US 270 -10 

Prices in INR/MT
Source: SteelMint Research

 
Iron_Pellet_Prices

Southern India Pellet Offers Decline in Line With Fall in Sponge Prices

Declining pellet sponge prices in southern India have pulled down domestic pellet offers. Bellary pellet offers have come down by INR 150/MT W-o-W and are heard at INR 5,700/MT for Fe 63% pellets.

P-DRI prices in Bellary have come down by INR 500/MT W-o-W.

However across other major markets, pellet prices continues to remain stable this week except Jharsuguda where prices have come down by INR 200/MT W-o-W on limited buying interest.

Indian Pellet Prices as on 31 Jan’17

City

Grade (Fe %) Prices W-o-W

Remarks

Barbil* 63 4,400-4,500 = Arya Iron & Steel and Jindal Steel & Power 
continue to hold offers at last week levels
Jharsuguda 63 4,400 -200 Amid limited buying interest, Shyam Metaliks & 
Energy has reduced pellet offers this week
Durgapur 63 4,500 = Sharp decline in P-DRI prices (down by INR 700/MT W-o-W)
has reduced pellet buying inquiries
Jamshedpur 63 4,200 +50 Adhunik Metaliks continues to keep pellet offers firm
Raipur 63 4,700 = Market participants reported that few deals were concluded at
INR 4,700/MT last week. However declining P-DRI prices may result 
in fall in pellet price fall.
Bellary 63 5,700 -150 Pellet offers have come down by INR 150/MT on weekly basis in line 
with fall in sponge offers.

Basic prices in INR/MT
*loaded to wagons
Source: SteelMint Research

Trade-wise:

1. Bilaspur based Rashi Steel kept reduced pellet offers to INR 4,600-4,700/MT (ex-Bilaspur). The pellet maker has concluded a deal for supply of 10,000 MT pellets to Champa at INR 4,650/MT (ex-Bilaspur).

2. Southern India pellet maker – MSPL is offering Fe 65% pellets at INR 6,050/MT

 
NALCO, Bauxite Output

NALCO- NINL to Jointly Produce Coal Tar Pitch

Two central government owned entities- National Aluminium Company (NALCO) and Neelachal Ispat Nigam Ltd (NINL) have signed a memorandum of understanding (MoU) for producing coal tar pitch. A joint venture (JV) company will be formed for this purpose.

The MoU was signed by S K Satpathy, general manager (business development and R&D), NALCO and S B Jagdale, joint managing director, NINL in the presence of T K Chand, chairman cum managing director (CMD), NALCO and other senior officials of the two companies.

“The agreement is part of the new business plan of NALCO to ensure backward integration and sustain the plans for forward integration,” said Tapan Kumar Chand, NALCO’s CMD. A coal tar distillation plant is proposed to be set-up, under the JV, based on the coal tar generated from NINL’s coke oven plant at its 1.1 MnT per annum integrated iron & steel plant at Kalinga Nagar in Duburi. NINL will be preparing a techno-economic feasibility report for the JV project.

 

Indian Sponge Offers Remain Under Pressure

Indian sponge offers remain under pressure as it reported further fall by INR 100-400/MT D-o-D. Looking at the price change in week, it is down to INR 800/MT. The major factor for price correction is the persistent decline in Ingot/Billet prices in the Indian domestic market.

Presently, domestic offers for 78-80 FeM C-DRI are assessed in the range of INR 13,700-16,000/MT (USD 202-235) ex-works. While, export offers by East Indian based manufacturers for lumps are prevailing at USD 240-245/MT CNF Bangladesh.

Trade Update of Key markets

Central India: Sparse demand from the neighbouring States as well from the local market has further decline sponge prices in Raipur. Integrated plants in Raipur are offering P-DRI at INR 14,200/MT which was at INR 14,400/MT on 30th Jan’17. Similarly, sponge DR-CLO prices are assessed at INR 16,000-16,200/MT by medium size sponge manufacturers.

East India: Rourkela based manufacturers are offering 80 FeM C-DRI mix material in the range of INR 13,800-14,000/MT & 100% lumps at INR 14,200-14,300/MT through CST billing. Manufacturers stated, less inquiries at this offer price.

South India: 80 FeM C-DRI offers in the region are prevailing at INR 14,800-15,000/MT & same grade P-DRI offers at INR 14,600-14,700/MT ex-works, Karnataka.

A sponge manufacturer in the region has quoted, “Sponge (DRI) price are likely to remain range bound or may fall slightly looking at weak buying by billet manufacturers as they have sufficient stock for coming few days”

Premium between C-DRI and P-DRI in Central India has increased by INR 150/MT to INR 1,100/MT W-o-W. In East & South regions it remain unaltered at INR 300-400/MT & INR 200-300/MT, respectively.

Domestic sponge offers as on 31 Jan’17

Particulars C-DRI D-o-D W-o-W P-DRI D-o-D W-o-W
Ex-Durgapur 13,700 – 400 -800  13,350 – 250 -700 
Ex-Rourkela 13,800 – 100 -500  0 0 0
Ex-Raipur 15,200 – 150 -600  14,100 – 200 -750 
Ex-Bellary 15,000 – 100 -500  14,700 – 100 -500 
Ex-Hyderabad 16,000 – 200 -500  15,750 – 150 -450 

Prices in INR/MT
Source: SteelMint Research

 

Week 05 Update: Chinese Wire Rod Offers Continue to Remain Firm

Chinese wire rod export offers remain unchanged in a week’s duration and stood at USD 445-450/MT FOB, following the price stability in the domestic market.

Meanwhile, domestic prices for 8 mm wire rod (Q235) were assessed at USD 521/MT (RMB 3,560/MT) in Shanghai & at USD 490/MT (RMB 3,380/MT) in Beijing. Offers remain unchanged in W-o-W.

The reason behind the price stability is little trade activities in the physical market on account of Chinese new year holidays.

In the similar line, other international market like CIS export offers were down by USD 23/MT, while South East Asian import offers remain firm in the same duration.

Global wire rod prices in week 05 (22-29 Jan’16)

Region Offers in USD/MT W-o-W
China export (FoB main port) 445-450 0
CIS export (FoB Black Sea) 410-420 -23
South East Asia (CFR) 447-452 0

Prices in USD/MT, USD 1= RMB 6.85
Source: SteelMint Research

 
Flat Steel, Indian HRC Export Offers,Indian, HRC, Export, Offers

India: Flat Steel Market Remains Quiet Over Mute Demand

Indian flat steel prices continues to remain stable this week owing to slack demand prevailing in the domestic market. Traders reported that domestic HRC/CRC prices continue to remain same  with last week levels. However market participants are waiting for Feb’17 price revision which is likely to be announced in the 1st week of Feb’17.

Also industry participants are eyeing for  the Union budget that will be presented in the parliament  tomorrow  (i.e. 01 Feb’17).

Current prices of HRC are assessed in the range of INR 42,500-43,000/MT (ex-Mumbai ), INR 43,000-43,250 (ex-Delhi).Prices are inclusive of Excise Duty of 12.5%.

Current prices of CRC are registered in the range of INR 48,300-49,000/MT (ex-Mumbai), INR 49,000 – 49,500/MT (ex-Delhi). Prices are inclusive of Excise Duty of 12.5%.

Prices of GP/GC are heard to be in the range of INR 54,300-55,000/MT (ex-Mumbai) and INR 54,000-54,500/MT (ex-Delhi).Prices inclusive of excise duty 12.5%

There is hardly any  improvement in demand even after the hike in flat products prices.  The market remains  dull and the demand from the user segment has also became lean.  Owing to poor demand in Indian flat steel market the traders are anticipating further fall in flat products prices in the month of February 2017.

 

Indian Met Coke Prices Stable, Demand Likely to Revive Post Budget

The Met Coke market in India has almost stalled as buyers adopted a wait-and-watch mode to decide their course of action only after tabulation of the union budget in the parliament.

Import offers have gone further low, being dragged down by the falling Coking Coal prices. The latest offer for the 64% CSR Met Coke is reported lower at USD 289/MT CFR India; and that for the 62% CSR Met Coke also down at USD 285/MT CFR India.

Exporters have quoted these offers at: USD 278/MT and USD 274/MT respectively on FoB China basis.
metcokeoffersFY17

Source: CoalMint Research

The dampened atmosphere in the country gave no reason to the domestic producers to revise their ex-works prices.

Domestic prices have remained at: INR 22,300/MT (east coast) and INR 21,000-28,000/MT(west coast).
metcokepricesFY17

Source: CoalMint Research

 

 
Japan,Flat steel,exports

Japan Flat Steel Exports Rise Marginally in 2016

According to the latest customs data, Japan flat steel exports which includes 7208 (HR coils /Plates), 7209 (CR coils), 7225 (Electrical sheets), 7210/7212(GP/GC) have registered a marginal increase of 0.75% to 27.94 MnT in 2016 against 27.73 MnT in 2015.

If yearly comparison is made, then Japan flat steel exports witnessed a downfall of 3.4% in Dec’16 against previous year. In Dec’15 the same stood at 2.34 MnT.

On monthly basis nation’s Flat steel exports have rose marginally by 3 %, to 2.26 MnT in Dec’16 against 2.19 MnT in Nov’16.
Japan,Flat steel,exports

Grade-Wise Japan Flat Steel exports
As per grade-wise analysis, 7208 exports rose considerably by 7.02% M-o-M in Dec’16 against Nov’16 whereas 7210 and 7212 have increased in Dec’16 against previous month. Although, other flat steel grades exports like 7225 and 7209 declined in Dec’16 as compared to Nov’16

Grade-Wise Analysis of Flat steel Exports as on 31st Jan’2016

Grades Dec’15 Nov’16 Dec’16 M-o-M (%) Y-o-Y (%)
7208 14,05,184 12,00,606 12,84,880 7.02 -8.56
7225 4,58,400 5,02,706 4,80,813 -4.36 4.89
7210 2,73,717 2,51,416 2,59,624 3.26 -5.15
7209 1,92,793 2,22,477 2,21,606 -0.39 14.95
7212 7,699 11,111 11,882 6.94 54.32

Fig in MT
Source-Japan Customs Data

Country-Wise Japan Flat Steel Exports in Dec’16
China was the major flat steel importer and 3,85,124MT was imported  from Japan in Dec’16 against 3,36,326 MT of flat steel in Nov’16. Other major importing countries include Thailand, Korea followed by Vietnam and Mexico.

Screenshot from 2017-01-31 15:30:27

 

India: Imported Manganese Ore Offers Drop Down

Imported Manganese Ore prices were softer this week as weakness in the Indian steel industry continued to undermine demand for manganese alloys, which also hit buying interest for manganese ore.

The Manganese Ore market is finding it difficult to sustain after months of soaring price levels. Manganese Alloy producers are adopting a cautious approach and are depicting reluctance in booking Manganese Ore at higher prices.

Chinese demand plays an important role, and has been reported to be weak at the moment as demand slowed over the Chinese New Year festivities. Global miners decided to cut their offers following few weeks of low demand for Manganese Ore. Australian Manganese Ore grade 46% is being offered at around USD 7.8 /DMTU CIF India. Price for 37-38% South-African Carbonated Ore has come down too, and is being offered at USD 6.1/DMTU CIF India. All prices are for February loading.

China is the largest seaborne importer of Manganese Ore in world but demand has softened there. Chinese buyers are observed to be less interested as they have stopped buying on account of Chinese New Year. However, it is to be seen how the Chinese influence pans out once the buyers return from their holidays.

Manganese Ore Monthly Average