Monthly Archives: April 2017

POSCO

Odisha Cancels Land Allotted to Posco Steel Project

Vexed over the lack of activity by Posco India, the Odisha government has scrapped the allotment of 1880 acres of land granted to the company for its mega steel plant near Paradip. The annulment of land has dashed all hopes of the country’s biggest FDI project.

Debi Prasad Mishra, the state’s industries minister said, the state’s land acquisition agency Idco wrote to Posco India on April 27 to cancel the land allotment. This was after three years of transfer of land to the company which remained idle.

Idco had acquired 578 acres of non-forest land and 1301 acres of forest land at Kujang and Erasama in Jagatsinghpur district. The acquired patch of land was later transferred to Posco India to facilitate establishment of a mega steel plant of 12 million tonne envisaged initially but later truncated to eight million tonne. For the eight million tonne plant, Posco India had asked for 2700 acres of land.

The state government has approved the taking back of land acquired for the Posco steel project to its land bank. Idco has already initiated work on erecting a compound wall around the land to save it from encroachment and avert law and order issues.

Posco in a letter to the state government in February this year, had expressed its lack of intent to develop the steel plant and sought surrender of land handed over to it by Idco.

Ever since the signing of a memorandum of understanding (MoU) with the Odisha government on June 22, 2005 to put up a 12 million tonne steel plant, the Posco project has been fraught with trouble. The South Korean steel behemoth had to face long, recalcitrant protests from land losers and project affected people.

Its hopes of winning the coveted Khandadhar iron ore deposits in Sundargarh district to feed its large steel plant were also dashed with the enactment of the new MMDR Act, 2015 which postulates award of mining rights through a system of transparent auctions. In a preferential treatment to Posco, the Odisha government had sought award of the mining lease to Posco India by invoking Section 11 (5) of the former MMDR Act on grounds of value addition and the project being the biggest FDI proposal.

For a brief spell, the Posco project was also entangled in a blame game between the Centre and the Odisha government. Union mines minister Piyush Goyal had recently blamed Odisha for the delays in securing various clearances by Posco. Goyal was also unruffled by Posco’s plan to mothball its Odisha project, asserting that other investors were ready to put up their projects.

 

Weekly Scrap Report, Week 18

Ferrous scrap market globally has been full of activities this week. The Highlight being China exporting scrap, Turkey returning to the scrap buying market.

Turkey

According to sources, the largest importer of scrap, started to book cargo after having a quiet last week. There has been some more bookings by Turkey, Deals by

  • ICDAS (Turkey’s 2nd largest Steel Company) had a deal with (BST (Belgium Scrap Terminal) for a mixed cargo of 35,000 MT containing 20,000 MT (HMS 1&2 75:25), 10,000 MT Shredded and 5,000 MT (PS HMS 1) at an average rate of USD 262/MT.
  • BASTUG (One of Turkey’s Top steel Producers) having a deal with WETZEL a US based supplier for a cargo of 19,000 MT (75:25), 5,000 MT (HMS 1), 1,500 (Shredded), 3,000 MT (Bonus), 1,500 MT (Bushelling) at an average rate of USD 261/MT
  • KAPTAN (turkey based company) had a deal with Refonda Estonia of 21,000 Tonne HMS (80:20) at an average rate of USD 265/MT and 5,000 Tonne (P&S) at an average rate of USD 275/MT,
  • Rensselaer and Ekinciler for a cargo conisting 15,000 tonne HMS 80:20 at an average rate of USD 269/MT,  8,000 tonne (shredded) at an average rate of USD 274/MT  and 2000 (Bonus) at an average rate of USD 279/MT.

China

This week the highlight news came that China had started exporting scrap as Chinese government is planning to root out scrap based furnaces in order to control pollution. Scrap exports from China in near term. According to participants, some scrap exports have recently been reported to Vietnam at around USD 260-265/MT CFR

India-Pakistan-Bangladesh

Indian scrap market has not been much active in the market. The importers would be benefited as rupee has appreciated in comparison to dollar. The prices are almost at the same levels as of last week.

The market in Pakistan suggest a rate of USD 305/MT levels. The buying is still on the weaker side with very less activities. The offers from UK have increased and decreased from US and Europe.

Scrap booking in Bangladesh have reduced as Bangladesh Taka has depreciated.

All around the world

The scrap prices have been volatile in the global market. The offers from UK have increased after British Pound went weak this week.

According to Steelmint Analysis, “The market is expected to stay volatile as the scrap market globally is effected due to various reasons primarily being china entering in scrap export”

 
Iron Ore Prices, Iron Ore, Prices

Will Iron Ore Prices Fall Below USD 50/MT in 2018?

The Steel Industry looks up to China for the forecast and plans its successive move to make the most of the opportunities available in the market. The current trends in Chinese market speak volumes to predict what the future holds for the steelmakers all over the world. Below are some of the indicators everyone that is related to the industry should watch for in coming days.

Rise in iron ore inventory at Chinese major ports: Iron ore stock at Chinese major ports have increased from 129.6 MnT as on 21 Apr’17 to 130.55 MnT on 28 Apr’17. The abundant supply of parked iron ore on Chinese ports has been having its unfavorable effect on global iron ore prices. The prices fell consistently for more than a few weeks now. Thirteen years’ high inventories at Chinese major ports are being looked at as a catalyst along with few other factors that will change the course for the rest of 2017 and the year next for iron ore prices.

Increasing iron ore supplies from Australia, Brazil & India: The other detriment is off-course the production itself that has steadily been growing for some time in major iron ore producing countries.Iron Ore Prices, Iron Ore, Prices

Brazil
The numbers for the quarter ended in Mar’17 suggest that Vale’s production grew by 11% Y-o-Y at 86.20 MnT over 77.54 MnT for corresponding period last year due to the ramp-up of the S11D and Itabiritos projects in the Southeastern System, it is estimated to produce 360-380 MnT iron ore by the end of 2017 which would mean a minimum of 3 % increase against 348.8 MnT production in 2016

Australia
Australian BHP Billiton the third largest iron ore producer’s output grew by 3.4% for Q2 at 60 MnT over 58 MnT in Q1 FY17. According to the report, the miner produced 118 MnT iron ore during first half of FY17. For Australian FY17, the miner maintains its production guidance between 228 and 237 MnT iron ore excluding production at Samarco. The miner produced 227 MnT iron ore during Australian FY16.

Moreover, the Western Australian Iron Ore (WAIO) output is recorded at 136 MnT in first half of FY17. The output increased by 4% Y-o-Y as it was 131 MnT during same time period a year earlier. In Q2 FY17, production from WAIO remained at 70 MnT.

WAIO’s output is recorded at 257 MnT in FY16. The output rose by 2% Y-o-Y as its Jimblebar mining hub operated at full capacity. The miner increased its forecast between 265 and 275 MnT for FY17. Along with a focus on productivity and the ramp-up of additional capacity at the Jimblebar mining hub, the company aims to increase its system capacity to 290 MnT pa in the FY19.

India
Indian iron ore output for Jan-Mar quarter is assessed by SteelMint at 56 MnT and is expected to reach between 210-220 MnT by the end of CY17. India produced 182 MnT iron ore in CY16 an increase of 30% Y-o-Y compared to 140.5 MnT in CY15.

A realistic view of supply over demand projects prices coming down to similar to the end of May’16 at USD 50/MT CFR China contrary to the anticipated increase in Chinese steel consumption, the buying is slowed down by the manufactures, some mill owner are preferring the local lower grade material in China over the higher grade foreign imported concentrate. In previous few weeks even after compromising prices the suppliers could not strike any large deals under tremendous pressure as buyers waited for further price fall to replenish their stocks.

The expert predictions of high prices to be afloat began to erode from the end of Mar’17 as soon speculators’ lack of interest bought the prices for the steel making material down below USD 80/MT CFR China after the futures were abandoned all of a sudden.

Intermittent rise with penny ante increase could not sustain the splendor for the material that attained the 30 months highest price on Feb, 21st 2017 at USD 95/MT CFR China.

Iron ore prices swirled down and hit almost a six-month low status last week at USD 62/MT CFR China on Apr, 18th 2017 as speculators evaluated the signs in the market from the largest consumer of iron ore China, there was also a steel output at a record in the month of March along with obvious increase in supply. A miner from Brazil, Vale is setting up a new facility, to boost up seaborne sales, presently miners in China have also increased the production levels.

Estimated production by three major iron ore producing countries for CY17

Producer

2016

2017 Guidance

% Change    Min

% Change   Max

Production

Min

Max

Vale

340

360

380

6%

12%

BHP Billiton

227

228

237

0%

4%

Western Australian Iron Ore (WAIO)

257

265

275

3%

7%

India

182

210*

220*

15%

21%

Total

1006

1063

1112

6%

11%

Figures in MnT
Source: Company Reports, SteelMint
*Expected

China’s increased iron ore imports & rising domestic iron ore output: China’s appetite for iron ore seems unending. China imported 271 MnT iron ore in Q1 CY17 against 241 MnT, thus up by 12% Y-o-Y. On the other hand, China’s crude iron ore production in the first quarter of 2017 was registered at 297.8 MnT, significantly up by 15% Y-o-Y as it was 259.2 MnT in the same period last year.

Declining Chinese steel prices: Amid weakening steel futures, Chinese domestic as well as export steel prices witnessed sharp plunge since beginning of Mar’17. For instance, Chinese HRC export offers have come down from USD 510/MT, FoB China in beginning of Mar’17 to currently prices of USD 420-425/MT, FoB China. On similar lines, Chinese rebar export offers have come down from USD 475/MT, FoB China in beginning of Mar’17 to current assessment of USD 410/MT, FoB China.

It seems the price decline spree is not coming to an end anytime soon. Unless some drastic measures are taken by the largest consumer of iron ore, the graph is headed only to south to slow down the already staggered market.

 

Bulk Freight Rates Likely to Rise the Next Week

The bulk shipping freight rates have not undergone any change from that the week last.

There has been no spurt in cargo shipping activity after all the ports in the Queensland region of Australia resumed operations after the temporary disruption resulted after the occurrence of the Debbie cyclone. Bulk shipping freight rates have thus remained unchanged.

However, imports of coal and iron-ore by China are expected to gain momentum in the coming week. Also, imports of Coking Coal by Indian steel makers are expected to rise. Demand for cargo vessels is also going to rise in the coming days.

Current freight rates (coal cargoes)

Route Supramax Panamax Capesize
Australia to India 17 14 10
South Africa to India 14 13.5 9
Indonesia to India 9 9 6

Current freight rates (iron ore cargoes)

Route Supramax
India to China 11

Freights in USD/MT
Source: CoalMint Research

The Baltic Dry Index has shown a continuous downfall as due to the weak demand for cargo vessels. On 28Apr’17, the index was at 1,109 points, having fallen from 1,195 points, as on 19Apr’17. The index is an indicator of global freight rate movements, in respect to all classes of vessels, transporting all kind of commodities, including coal and iron ore.

 

China Steel Market Highlights for Week 18, 2017

This week turned out to be optimistic in terms of domestic market sentiments for Chinese steel industry. Domestic iron ore, billet and finished steel prices in China observed northwards movement amid rise in futures.

Chinese spot iron ore prices remain range bound- Limited trade activities in China, kept spot iron ore prices intact this week. Fe 62% fines index kept hovering between USD 65-68/MT, CFR China. Buying interest for seaborne material remained thin ahead weekend holidays with limited trade deals getting concluded.

On 28 Apr’17, iron ore stock at Chinese major ports was recorded at 130.55 MnT marginally up by 0.7% W-o-W. However there was decline seen in lump inventories following which lump premium moved up to USD 0.039/DMT, CFR China. To the contrary, pellet premium inched down to USD 14.25/DMT, CFR China.

Seaborne coking coal supply eases, prices fall – With reopening of Goonyella rail line, coal transportation to few export terminals in Australia eased out. After which, coking coal prices of Australian Premium HCC dropped to USD 240/MT, FoB Australia.

Chinese billet domestic as well as export offers witness increase – Domestic billet prices in China strengthened by RMB 190/MT W-o-W. On similar lines, Chinese billet export offers also increased by USD 10/MT W-o-W to USD 390-400/MT, FoB China.

china map info

Domestic steel prices in China rise amid strengthening futures – Domestic HRC prices in China moved up by RMB 220/MT, W-o-W to RMB 3,140-3,170/MT (ex-works). Prices gained momentum on the back of strengthening steel futures. Chinese HRC export offers also rose marginally by USD 5-10/MT W-o-W on gains in domestic market.

Similarly, rebar prices in China’s domestic market increased to RMB 3,340-3,370/MT against RMB 3,200-3,230/MT in the beginning of this week. However Chinese rebar export offers declined by USD 5-10/MT W-o-W amid dull buying interest.

Steel Raw Material & Finished Steel Prices in China:

Particulars

Currency Current Prices 1W

1M

Spot Iron Ore Fines Fe 62%, CNF China USD 68 67 79
Iron Ore Concentrate in Hebei Province, Fe 66% (ex-works) RMB 650 580 820
Met Coke, 64%, FoB China USD 315 315 271.5
Chinese Domestic Billet, ex-works RMB 2,970 2,780 3,120
Billet 150*150 mm, FoB China USD 390-400 380-390 438
HRC, FoB China USD 420-425 415-420 485
CRC, FoB China USD 450-460 455 535
Rebar, FoB China USD 410-415 420 445

Prices mentioned are on per tonne basis
Source: SteelMint Research

 

Week 18 – Snapshot of Indian Semis Market

During week 18, Indian Semis prices were volatile by INR 500/MT (USD 8).

The producer sources mentioned, in the week opening trade activities was quite good. Although, in 2nd half it recorded mute which resulted fall in prices.

Week – 18 dynamics

1. 78-80 FeM C-DRI offers are assessed at INR 16,200/MT (-500) ex-Durgapur, INR 15,800/MT (0) ex-Rourkela, INR 17,200/MT (0) ex-Raipur and INR 17,100/MT (+400) ex-Bellary. Price changes mentioned are weekly basis.

2. 78-80 FeM P-DRI prices are assessed in the range of INR 15,300-17,700/MT across major markets.

3. 125×125 mm billet prices are evaluated at INR 25,950/MT (-300) in Durgapur, INR 25,500/MT (0) in Rourkela, INR 26,050/MT (+450) in Raipur, INR 27,900/MT (-500) in Mumbai, INR 28,700/MT (+50) ex-Ahmedabad, INR 27,500/MT (-50) in Chennai and INR 28,000/MT (0) in Hyderabad.

4. Downward trend further in Indian pellet market as prices fell again in the range of INR 100-300/MT owing to weak demand in domestic & global market.

5. In the global market there was stability in Iron ore prices. While, slight fall is being assessed in pellets by USD 3/MT. The prices are assessed – Iron ore 62% Fe at USD 67/MT & pellets (6-20 mm) at USD 81/MT; CNF China.

6. Odisha based Neelachal Ispat increase pig iron prices by INR 1,400/MT. While, in Raipur it remain firm and in Durgapur & Giridih, decline by INR 500/MT.

Outlook for Week – 19

1. Indian semis prices are likely to remain on down trend amid falling prices of key raw materials. The manufacturers also mentioned as demand is weakening since couple of weeks, selling pressure is mounting gradually.

2. Indian pellet prices to fall further as demand is not supported globally amid anticipated fall in Iron ore prices for May’17 deliveries.

3. The industry participants mentioned, if the prices of billet slump further, there are chances for further fall in pig iron prices as at current prices, trades are not good.

Indian Raw material & Semis prices as on 29 Apr (Week 18)

Products Markets Prices in INR/MT W-o-W
Billet 125*125 MM ex-Mumbai 27,900 – 500
Scrap HMS (80:20) ex-Mumbai 21,500 + 300
C-DRI 80 FeM ex-Raipur 17,200 0
P-DRI 80 FeM ex-Raipur 15,900 0
Pig iron Steel grade ex-Raipur 25,100 – 50
Pellet Fe 63%, 6-20 mm ex-Durgapur 5,050 – 100
Iron ore Fe 62%, 5-18 mm Joda loaded to wagon 4,300 0

Basic prices in INR/MT; all taxes will be applicable
*Incld Royalty, DMF & NMET
Source: SteelMint Research

 

India: Structure Prices Remain Volatile in Week 18

Since couple of weeks there is bearish sentiment in the structure market over volatility in prices of Ingot/billet.

Following the same, the prices of Light & Heavy Structures registered price movement of INR 100-700/MT across major Indian markets.

The Structure manufacturers have reduced prices – East (Durgapur) by INR 750/MT, South (Hyderabad) by INR 500/MT, North India (Ghaziabad) by INR 400/MT & in Western (Mumbai) by INR 100/MT, W-o-W.

While, it registered a uptick in Central India (Raipur) by INR 300-400/MT & in West (Ahmedabad) by INR 200/MT, W-o-W.

Central India market Raipur that is considered as hub of Medium and small rolling mills the manufacturers increased offers as there was rise in Ingot and Billet prices.

While, in Western Region, the market experienced uncertainty which in turn saw a slight correction in prices.

A renowned structure supplier in Ahmedabad stated, “There was demand persisting in the market in initial days of the week which gradually declined at the weekend due to dull sentiments prevailing in other parts of the country

To view all size structure steel price, click here.

 

India: Goa DMG Notifies Lots for 20th & 21st Iron Ore E-auctions

Goa DMG plans two back-to back e-auctions for 1.63 MnT iron ore and 1.61 MnT on 4th and 5th May’17.

Directorate of Mines & Geology (DMG), govt. of Goa has notified lots for upcoming e-auctions. DMG has scheduled two e-auctions. Majority of the quantity put under auction is of low-grade.

1.63 MnT iron ore will be put under hammer on 4th May’17 via 20th e-auction. Out of the offered quantity, 0.96 MnT is ROM ranging from Fe 27.6-56.4%, 0.47 MnT is fines having Fe content 18.6-59.2% and 0.20 MnT is lump ranging from Fe 39-59%.

21st e-auction for 1.61 MnT iron ore is scheduled on 5th May’17. Out of the total quantity to be auctioned, 1.16 MnT is ROM with grade Fe 28.5-60.89%, 0.37 MnT is fines having Fe content ranging from Fe 38.3 to 58% and 0.08 MnT is lump having Fe 47-63%.

19th e-auction received dull response and attracted single buyer

Previous iron ore e-auction conducted on 21st Apr’17, received very dull response with 91% of the offered quantity (2.16 MnT) remaining unsold. Only single buyer – Timblo Pvt Ltd booked the entire allotted quantity of 0.18 MnT. Falling spot iron ore prices in China and increased discount on Indian low grade fines has narrowed down realizations for Indian exporters, following which exporters kept themselves away from participating in e-auction.

Presently low-grade Indian iron ore fines (Fe 57%) is trading at a discount of 41% and is assesed at USD 27/MT, FoB India

So far, Goa DMG has managed to sell 10.85 MnT iron ore via 19 e-auctions conducted so far since auctions started in the state from Feb’14 onwards.

 

India: GP Prices Stable Over Improved Demand in Domestic Market

In contrast to other flat products, India GP prices remained stable this week amid improved demand in domestic market.However,improved demand,rising exports and stable prices collectively pushing demand of GP in Indian flat steel market.

Prices of 0.80 mm GP across other major markets are hovering in the range as follows: Hyderabad – INR 55,000/MT; Mumbai – INR 56,000-57,000/MT; Delhi – INR 55,000-56,000/MT and INR 55,500/MT in Chennai. Prices are inclusive of Excise Duty of 12.5%.

Indian GP/GC Exports Boost by 21% Y-o-Y In FY17
GP exports witnessed the drastic surge in exports by 21% to 1.7 MnT in FY17 compared to 1.4 MnT in FY16. Rise in global demand of GP and imposed anti-dumping on Chinese GP gave a good opportunity to Indian exporters. This resulted in increase in volumes of GP in exports market. This has also supported domestic GP prices in India.

Major markets for Indian GP exports  were Belguim at 0.25 MnT followed by UAE at 0.19 MnT, Spain at 0.14 MnT and Ethopia at 0.11 MnT.

China’s HDG Prices Decline by USD 5/MT Over Subdued Demand
Chinese manufacturers have declined HDG prices by USD 5/MT over bearish sentiments coupled with lesser buying inquiries in the global market.However the prices came under pressure owing to dull and weak demand prevailing in the China’s domestic market.

China’s 1mm HDG export offers are hovering in the range of USD 520-525/MT, FoB China. Last week the same was heard in the range of USD 520-530/MT on FoB basis.

Although thin buying interest continued to remain among the buyers.Moreover South America are bidding around USD 510/MT,on FoB basis which is difficult for Chinese mills to agree upon as the export offers have already gone to their lowest levels.

 

Global Pig Iron Market Calms Down On News Of Chinese Scrap Exports

Seaborne pig iron market is possibly heading to a bearish mode on news of recent scrap exports from China.

It may be noted that Chinese government is planning to root out scrap based furnaces in order to control pollution. There is no exact number, but capacity is estimated to be around 80-100 MnT.

This will possibly initiate scrap exports from China in near term. According to participants, some scrap exports have recently been reported to Vietnam at around USD 260-265/MT CFR, despite 40% tax on scrap exports from China.

Bearish sentiments in pig iron market

Seaborne pig iron trade likely to remain low despite the fact that supply of pig iron is limited across the world. Difference between scrap and pig iron is quite high, pig iron being expensive. Buyers will not pay such high premium for pig iron over scrap.” said a trader based in Dubai.

Current offers for steel grade pig iron from CIS region is assessed at around USD 300-310/MT FOB Black Sea. This is equivalent to USD 330-340/MT CFR South East Asia. Whereas scrap is at around 270-280/MT CFR South East Asia, he further added.

As China’s inventory of end-of-life automobiles, appliances and obsolete buildings grows, steel and scrap industry analysts have predicted that the nation could soon become a significant net exporter of ferrous scrap. While the 40% duty does not prohibit ferrous scrap exports, it does make such shipments unprofitable in many cases.