Monthly Archives: January 2020

Daily Update: Indian Steel Market 31 Jan’20

Indian semi finished market reported mix trends while billet offers decline by INR 100-300/MT & sponge fluctuated by INR 100-200/MT in major markets.

In context to finished long (Rebar), prices marginally fluctuated by INR 100-300/MT in major locations on average trade activities.

SteelMint’s latest price assessment for induction furnaces billet in Indian market stood at INR 29,200-32,600/MT (USD 408-456) ex-plant.

Further, the coal-based sponge (78-80 FeM) C-DRI price assessment was at INR 18,900-20,600/MT (USD 264-289); prices are ex-plant & excluding GST.

Rupee & BSE Sensex

— On 31st January 2020 (Friday) INR to USD exchange rate stood at INR 71.38.

— ICEX (Indian Commodity Exchange Ltd) Feb’20 contract for STEELLONG today open at INR 32,540/MT & last traded (IST 18:30 hrs) at INR 32,450/MT.

— BSE Sensex closed at 40,723(-190) on Friday, as against last day (Thursday) at 40,913(-284).

— NSE Nifty50 index was closed today at 11,962(-73) & Nifty Metal at 2,569(-59).

Raw Material

— As per assessment containerized Shredded 211 from North America and Europe to India now stands at USD 290-294/MT CFR, down by USD 6-8/MT W-o-W, against USD 295-299/MT.

— Melting scrap offers in Western India- Mumbai (Maharashtra) decline by INR 100-200/MT in a day trade activity.

Semi Finished

— Rashmi Metaliks in Durgapur has offers Sponge P-DRI at around INR 19,600/MT, as per market sources.

— Officials from Neo Metaliks, Durgapur stated limited inquiries for the steel grade pig iron at prevailing offers of INR 28,500/MT ex-plant.

— Ludhiana, North India based trade participants reported steel & foundry grade pig iron offers at INR 30,300/MT & INR 31,100/MT on FoR basis & excluding 18% GST.

— Raipur based sponge P-DRI makers have slightly reduced their offers by INR 100-200/MT to INR 19,200/MT ex-plant

— Sources reported Chandrapur (Maharashtra) based manufacturers offered Sponge P-DRI (FeM 80) at around INR 19,400-19,500/MT, ex-plant & excluding GST

— BMM Ispat a price trend setter in South Indian sponge market has kept offers unaltered today and offered FeM 80 P-DRI lumps at INR 18,700-18,800/MT ex-Bellary, Karnataka.

— Hare Krishna, a 300 TPD sponge manufacturer in Bellary, Karnataka has offered FeM 79-80 P-DRI at INR 18,600/MT ex-plant, an official reported.

Rebar (12 mm)

— Rathi Steels based in North region has unchanged their offer at INR 37,400/MT.

— Muzaffarnagar based Swarup Rolling Mills Limited (Swarup TMT) is offering at INR 34,900/MT (down by INR 100/MT).

— Raipur based Real Ispat (GK TMT) has unchanged their offer at INR 35,600/MT.

— Bajrangbali Steel Industries Pvt Ltd based in Odisha is offering rebar at INR 33,600-33,700/MT.

— Jalna based SRJ Peety Steels Pvt Ltd (Shree Om) is current offering at INR 36,300/MT.

— Jalna based Kalika Steels Alloys Pvt. Ltd. (Kalika TMT) has unchanged their offer at INR 36,300/MT.

— Gujarat based, Mono Steel (India) Ltd. (Mono TMT) is current offering at INR 37,300/MT FoR.

Wire Rod & Pipe

— APL Apollo Tubes Ltd, has to increase Pipe price by INR 1,000/MT to INR 43,500/MT (USD 610); ex-plant in central India, Chhattisgarh for Feb’20.

— ERW Pipe offers by fluctuated INR 100-300/MT to INR 34,600-34,800/MT ex-Raipur, INR 36,800/MT ex-Mandi Gobindgarh & INR 34,500/MT ex-Rourkela.

Reference prices as on 31st January 2020

Particular/Delivery Size, Grade, Origin Prices Min Max Change 1W 1M
Scrap Ex-Alang HMS(80:20) 24,100 24,000 24,200   0 24,200 24,400
Ex-Mumbai HMS(80:20) 22,900 22,800 23,100 – 100 23,200 23,000
Ex-Chennai HMS(80:20) 22,700 22,500 22,800 – 100 23,400 23,200
C-DRI Ex-Durgapur Mix, FeM 78%, +/-1 20,600 20,500 20,700   0 20,700 20,200
Ex-Rourkela Mix, FeM 80%, +/-1 19,500 19,400 19,600   0 19,500 19,900
Ex-Raipur Mix, FeM 80%, +/-1 20,300 20,200 20,400 + 100 20,600 20,900
Ex-Bellary Lumps, FeM 80%, +/-1 18,900 18,800 19,000 – 100 19,200 19,500
P-DRI Ex-Durgapur Lumps, FeM 78%, +/-1 19,600 19,500 19,700   0 19,750 19,300
Ex-Raipur Lumps, FeM 80%, +/-1 19,200 19,100 19,300 – 100 19,700 20,100
Ex-Bellary Lumps, FeM 80%, +/-1 18,600 18,500 18,700 – 100 18,900 19,300
Ex-Hyderabad Lumps, FeM 80%, +/-1 19,200 19,100 19,300 – 100 19,500 19,800
Ingot Ex-Mandi Gobindgarh 3.5 x 4.5 Inch, IS 2830 32,050 32,000 32,100 – 250 32,500 32,500
Ex-Durgapur 3.5 x 4.5 Inch, IS 2830 29,900 29,800 30,000 – 100 30,200 30,000
Ex-Rourkela 3.5 x 4.5 Inch, IS 2830 28,800 28,700 28,900 – 100 28,950 29,650
Ex-Raipur 3.5 x 4.5 Inch, IS 2830 29,100 29,000 29,200 – 100 29,550 30,100
Ex-Mumbai 3.5 x 4.5 Inch, IS 2830 31,500 31,400 31,600 – 300 32,000 32,200
Billet Ex-Mandi Gobindgarh 100×100 mm, IS 2831 32,550 32,500 32,600 – 250 32,900 33,000
Ex-Durgapur 100×100 mm, IS 2831 30,350 30,300 30,400 – 50 30,700 30,250
Ex-Rourkela 100×100 mm, IS 2831 29,250 29,200 29,300 + 50 29,500 29,900
Ex-Raipur 100×100 mm, IS 2831 29,700 29,600 29,800 – 100 30,100 30,600
Ex-Ahmedabad 100×100 mm, IS 2831 32,000 31,900 32,100 – 300 32,900 32,900
Ex-Mumbai 100×100 mm, IS 2831 31,900 31,800 32,000 – 300 32,300 32,500
Ex-Chennai 100×100 mm, IS 2831 31,500 31,400 31,600   0 31,900 32,800
Ex-Hyderabad 100×100 mm, IS 2831 31,000 30,900 31,100   0 31,300 31,500
TMT Ex-Delhi/NCR 12-25 MM, IS 1786- 500 Fe 36,200 36,000 36,400 – 100 36,800 36,200
Ex-Durgapur 12-25 MM, IS 1786- 500 Fe 34,200 34,000 34,600 – 100 34,600 34,600
Ex-Rourkela 12-25 MM, IS 1786- 500 Fe 33,600 33,500 33,700 + 100 33,700 34,300
Ex-Raipur 12-25 MM, IS 1786- 500 Fe 33,400 33,400 33,600 – 100 33,500 34,200
Ex-Jalna 12-25 MM, IS 1786- 500 Fe 36,100 35,900 36,300   0 36,200 36,300
Ex-Mumbai 12-25 MM, IS 1786- 500 Fe 35,800 35,600 36,000   0 36,200 35,800
Ex-Chennai 12-25 MM, IS 1786- 500 Fe 35,600 35,500 35,800 – 100 36,000 36,300
Ex-Hyderabad 12-25 MM, IS 1786- 500 Fe 34,800 34,700 34,900 + 100 35,000 35,200
Wire Rod Ex-Durgapur Wire Rod(5.5 MM) 34,000 34,000 34,300 – 100 34,700 34,800
Ex-Raipur Wire Rod(5.5 MM) 33,100 33,000 33,300   0 33,700 34,800

Basic prices in INR/MT & excluding of GST @ 18%
Source: SteelMint Research

 

Absence of Trade Keep’s PELLEX Unchanged

PELLEX stable at INR 7,150/wmt (DAP Raipur).  No pellet deals heard from Raipur pellet makers in this publishing window. However, market participants expected pellet offers may be come down soon.

Major Raipur based pellet makers kept the offers stable at INR 7,400/MT( Ex-plant); normalizing for freight to Raipur at INR 7,550/MT (DAP Raipur). There are market Indication that offers may revise soon.

Raigarh based pellet makers offer unchanged at INR 6,400- 6,600/MT (EXW).  Jharsuguda based pellet maker is also at the same level INR 6,400-6,500/MT (EXW).

SteelMint P-DRI Assessment (Jan 31, 2020) down by INR 300/MT W-o-W to INR 19,400/MT as against INR 19,700/MT (Ex-Raipur) a week before.

No pellets export deal heard in this publishing window. Global iron ore fines (Fe 62%) prices have come down sharply by USD 10/MT to USD 83/MT. SteelMint assessment for standard grade pellets (Fe 64%, 3% Al) stands at USD 120-122/MT, CFR China down by USD 3/MT against last week.

Click here to see SteelMint Pricing Methodology and Rationale documents.

To provide feedback/suggestions, please contact info@steelmint.com 

 

Indian Imported Scrap Offers Decline; Trades Pick Up

Imported scrap offers to India moved down, following global downtrend. Buying activities picked up some momentum with both shredded and HMS bookings getting concluded. However, there is still some caution from the buyers’ side regarding instability in the offers, especially with the uncertainty on the impact from Chinese market’ amid corona-virus risk.

SteelMint’s assessment for containerized Shredded 211 from North America and Europe to India now stands at USD 290-294/MT CFR, down by USD 6-8/MT W-o-W, against USD 295-299/MT last week. Few bookings for Shredded were reported to Nhava Sheva and Mundra at USD 291-293/MT CFR in the last couple of days, while inquiries from buyers have increased in comparison to previous weeks.

Dubai origin HMS 1 super (no ci gi) is being offered at around USD 282-284/MT CFR, while HMS 1&2 bookings were reported at around USD 272-275/MT CFR. West African HMS to Goa was reported to be offered at USD 283/MT CFR Goa today, however bids from mills in Goa stood at around USD 275/MT CFR which prevented trades getting concluded in the last couple of days.

UK HMS 1&2 (80:20) offers too plunged and are currently being offered at around USD 275-278/MT CFR, while South African origin HMS 1 (hand-loaded) offers are now down to USD 290/MT CFR, amid few bookings.

According to sources, inventory position of scrap with most mills is above average, with active bookings during Dec’19-last week and Jan’20-1st week being shipped shortly, however given the Chinese market’s uncertainty on corona-virus threat, buyers look to secure material before any potential Chinese production cuts in future leads to any drastic change in prices.

Pakistan imported scrap prices fall in recent deals – After remaining range-bound for over last week, offers for shredded 211 scrap from UK/Europe has dropped to USD 290/MT CFR Qasim levels with bookings being concluded at this level today. Prices have come down by USD 3-5/MT against beginning of this week. In the last few days, trades for Shredded have closed at USD 290-292/MT CFR.

 
SECL New Production Record

SECL Attains Highest Coal Production in a Day for FY20

South Eastern Coalfields Ltd (SECL), the largest coal producing subsidiary of CIL, has managed to achieve a new milestone for FY20 having been on a production spree recently.

The company has attained 560,301 MT coal output on 30 Jan’20, thus marking its highest coal production in a single day for FY20. Apparently, its previous best output figures for the current fiscal also came few days ago when it had managed 550,029 MT coal production on 27 Jan’20.

Recovering from the set-back occurred in Sep’19, wherein its production schedule was drastically hampered by monsoons. SECL has taken immediate measures to elevate the production levels to meet the deficit.

In line with the recent developments, the company reported on 23 Jan’20 that it had crossed 500,000 MT single day coal production for 11 successive days.

Latest environmental nod is expected to boost SECL’s aim of replicating the performance seen in FY19, when it became the first coal company in the country to attain 150 MnT coal output in a fiscal year.

Ministry of Environment, Forest and Climate Change, MoEFCC has increased the normative coal production capacity of SECL’s Kusmunda UG mines to 50 MnTPA, while its peak capacity has been augmented to 62.5 MnTPA.

Incidentally, it was the third time that environment clearance for the coal mine has been raised. Previously during FY19, the production limit was first elevated from 26 MnTPA to 36 MnTPA by MoU, which was then further increased to 40 MnTPA.

Similarly, environment clearance of Khairaha mine under Sohagpur area having production capacity of 0.819 MnTPA, has been increased for further 30 years.

The environmental grant is likely to speed-up SECL’s mining activities and help it to achieve the expected production target of 170 MnT for FY20.

 

India: APL Apollo to Increase Pipe Price by INR 1,000/MT for Feb’20

APL Apollo Tubes Ltd – one of the largest ERW pipes manufacturers in India has to increase price by INR 1,000/MT (USD 14) and the prices will be applicable from 1st Feb’2020.

The company’s offer for Feb’20 are floated at around INR 43,500/MT (USD 610), which was hovering at INR 42,500/MT in Jan’20. The company increased offers twice in the month of Jan’20, first on 8th Jan’20 by INR 1,000 to INR 41,500/MT and further by INR 1,000 to INR 42,500/MT on 17th Jan’20. Prices mentioned are on ex-plant basis in Chhattisgarh, central India.

The reason behind the price hike as cited by official is increase in domestic flat steel prices by INR 1,500-2,000/MT M-o-M.

APL Apollo Tubes Limited is the largest producer of Electric Resistance Welded (ERW) Steel Pipes and Sections in India, with a capacity to produce 2.5 MnT pa. The company has vast distribution network is spread across India, with warehouses and branch offices in 29 cities.

As per assessment, the current offers through the secondary ERW pipe mills are reported at INR 34,600-34,800/MT ex-Raipur (Chhattisgarh), INR 36,800/MT ex-Mandi Gobindgarh & INR 34,500/MT ex-Rourkela (Odisha), excluding of 18% GST.

 

Vedanta Limited to acquire Ferro Alloys Corporation Limited

FACOR was admitted under Corporate Insolvency Resolution Process in terms of the Insolvency and Bankruptcy Code, 2016 (“IBC”) and the insolvency proceedings were commenced against FACOR pursuant to the order dated July 06, 2017, and March 04, 2019, of the Hon’ble National Company Law Tribunal (NCLT), Kolkata.

NCLT Cuttack, vide its order dated January 30, 2020, under Section 31(1) of the IBC, approved the Resolution Plan submitted by Vedanta Limited for Ferro Alloys Corporation Limited (“FACOR”) under the ongoing corporate insolvency resolution process filed by REC Limited (formally known as Rural Electrification Corporation Limited).

The consideration payable for the acquisition of FACOR on debt and cash-free basis under the approved Resolution Plan is INR 10 Crores as well as the equivalent of cash balance in FACOR’s subsidiary, FACOR Power Limited (FPL) as Upfront Payment and zero-coupon, secured and unlisted Non-Convertible Debentures of the aggregate face value of INR 270 Crores to the Financial Creditors payable equally over 4 years commencing March 2021.

Vedanta Limited will acquire management control and as per approved Resolution Plan, it will hold 100% of the paid-up capital of FACOR. FACOR has a strong presence in the business of producing Ferro Alloys and owns a Ferro Chrome plant with capacity of 72,000 TPA, two operational Chrome mines and 100 MW of Captive Power Plant through its subsidiary, FACOR Power Limited (FPL). The chrome plant and the mines are located in Orissa. The turnover in FY 2019 was INR 580 crore.

Vedanta Ltd has a track record of acquiring firms and turning them around as witnessed with firms such as Cairn Oil and Gas, Hindustan Zinc Limited and Electrosteel Ltd to name a few. The acquisition will complement Vedanta’s existing steel business as the vertical integration of Ferro manufacturing capabilities has the potential to generate significant efficiencies and will help Vedanta to increase its portfolio in the steel business.

 

Vietnam’s Steel Production Expected to Grow by 6-8% in CY20

Vietnam Steel Association (VSA) forecasts the country’s steel production to grow at about 6-8% in CY20.

The association said that global steel market in CY19 was slow and it was expected that steel production would not improve in the Q1 CY20.

The crude steel in CY20 is estimated at nearly 18 MnT and hot-rolled steel output is estimated at 17.1 MnT. It is also expected that the country would have to import some raw materials such as iron ore (nearly 17 MnT), scrap steel (about 5 MnT) and hot-rolled steel coil (5 MnT) in CY20.

Globally, capacity growth may exceed demand growth, leading to shrinking exports and profit.

Further, several proposed steel projects in ASEAN would lead to an oversupply and it would take about 20 years for ASEAN steel consumption to catch up with this capacity, the association said.

Vietnam’s crude steel production and sales in Dec’19 reached nearly 1.3 MnT, registering an increase of 3.2% M-o-M over previous month and 1.1% Y-o-Y over the same period in CY18.

Crude steel consumption in the country increased by 9.4% M-o-M to over 1.4 MnT, up 13.4% Y-o-Y.

 

15 Things SteelMint Learned from POSCO CY19 Results

South Korea’s steel major – POSCO announced its CY ’19 results today. The major findings from the annual report are as follows:

1. Company’s crude steel production inched up in CY19- POSCO’s crude steel production inched up by 1% at 38,007 thousand tons in CY ’19 in comparison to 37,738 thousand tons in CY’ 18. The company increased production of crude steel ahead of the revamping of BF#3 at Gwanyang works from Feb’20, estimated to last for about 3 months.

2. Company’s product sales volumes went up in CY19- Company’s sales volumes increased slightly by 1% to 35,990 thousand tons in CY ’19 as against 35,588 thousand tons in the previous year. Product sales went up on plate sales growth for shipbuilding and construction sectors.

3. Company’s export sales up by 6% in CY’19- Export sales stood at 16,081 thousand tons in CY’19 increased by 6% in comparison with 15,131 thousand tons in CY18.

4. Domestic sales move down by 3% in CY ’19- Company’s domestic sales move down by 3% at 19,909 thousand tons in CY19 as against 20,457 thousand tons in CY’ 18.

5. Product inventory fell by 26% in CY’19- Company’s product inventory slashed by 26% in CY’19 to 1,107 thousand tonnes against 1,500 thousand tons in the previous year.

6. Sales volume from POSCO Maharashtra fall- The sluggish sales of the automobile sector and slow economic growth in India led to a decline in the sales volume. Sales volume fell to 1,567 thousand tons in CY’19 against 1,778 MT in CY’18.

7. PT Krakatau sales mark highest in CY19- Production/sales marked the highest, but operating profit shrank due to raw material price hike and weaker sales of high-margin products.

8. Carbon steel sales prices down by 2% in CY ’19- Company’s carbon steel prices inched down by 2% in full-year CY’19 to 722 thousand KRW from 733 thousand KRW in CY ’18.

9. Global steel demand likely to remain slow- The global steel demand may remain weak amid low economic growth rate and USA China trade spat. Chinese steel demand in CY’20 is estimated to grow by 1% Y-o-Y maintaining the 900 MnT crude steel output. Meanwhile, the EU and the USA’s growth rate will be at 0.6% owing to low economic development. However, govt-led stimulus and increased spending on infrastructure in emerging markets like India, ASEAN, and Russia may keep demand supported.

10. Chinese steel market continues to remain strong- In China, the construction sector performed well amid an influx of investments in properties development. Also, in the Oct-Dec steel prices remained supported amid robust restocking demand and winter production curbs. Also, the distributor’s inventory slipped for 10 consecutive weeks from Oct to Dec from 9.9 MnT to 7.7 MnT.

11. Automobile production anticipated to remain weak in CY ’20- In 2019, Korea’s automobile sector remained depressed amid the end of subsidies and increased liabilities. Thus, this delay in normal recovery of the sector shall weigh on 2020 production, which may fall under 4 million units and yet show a marginal recovery on a yearly premise. Korea Automobile manufacturers association mentioned the production of cars in CY19 to 3,951 which is expected to be 3,983 in CY20.

12. Construction investment may decrease- Construction investment in Korea will decrease on a yearly premise but the rate will be narrower as public investment is expected to expand.

13. Shipbuilding volumes to increase in CY’20- The demand in Korea’s shipbuilding sector is likely to increase in CY’20 on the back of increased demand for environment-friendly ships. Also, the IMO environment regulation shall lead to an increase in the replacement demand of ships.

14. Global iron ore prices to inch up in Q1 CY’20- The global iron ore prices are expected to touch USD 90-95/MT in Q1 CY’20 depending on steel demand and Chinese port inventory. Also sustained steel production in China and increased restocking demand in Australia ahead of the rainy season shall keep the iron ore prices supported. However, in Q4 demand strengthened as the Chinese steel market improved and winter environment control was loosened, which pushed up the price to record U$89/ton average

15. Coking coal prices to rebound in Q1 CY’20- Coking coal prices are expected to touch USD 150-160/MT in the first quarter and will be higher than Q4CY19. Amid the gap between Chinese domestic coal and imported coal prices, it is anticipated that competitive imported coal demand shall rise with the renewal of annual import quotas. Along with this, the recovering Indian steel sector shall also lead to an increase in demand for coal, pushing the prices up. However, in Q4 coking coal stood at USD 140/MT lowest in 3 years owing to weak demand in China and credit crunch in India.

 

Odisha Auction 2020 : Narayanposhi Mine Fetches Premium of 72% in Technical Round

Odisha Govt started Narayanposhi iron ore block technical qualification round on 30th Jan 2020.

As per the sources, there were ten technically qualified bidders for the Narayanposhi iron ore mine block. The mine fetched the highest premium of 72% from JSW Steel in the technical round, as per sources.

Odisha govt. is expected to announce technically qualified bidders for other mines one after other gradually in the coming days.

 Name of the Block Technically Qualified Bidders
 Narayanposhi Iron ore Block JSW Steel Limited
KJS
Arcelor Mittal India Pvt Ltd
Orissa Metaliks
Rungta
Pro-Minerals
RINL
Vedanta
JSPL
Tata Steel

The first iron ore block put to auction, Nuagaon mine fetched the highest premium of 89.4% from JSW Steel in the technical round.

A.M.T.C. (P) Ltd was the existing lessee of Narayanposhi iron ore mine block. The mine has an EC limit of 6 MnT pa and has exploration done upto G2 level. The mine has total geological resource of 190.6 MnT iron ore and 0.486 MnT Mn ore.
Production of iron ore from the mines was recorded at around 2.99 MnT in FY’19 and 3.328 MnT in FY20 (till Nov’19).

 
MCL Coal Production

MCL Revises Surface Transportation Charge for Coal

Mahanadi Coalfields Ltd (MCL), the mining arm of CIL operating in Odisha, has revised the surface transportation charge (STC) which it imposes on customers for transporting coal from mines to loading points.

The cost varied upon distance covered upon coal transportation is primarily revised every six months in accordance with the decision taken by MCL’s officials.

MCL has kept the transportation charges unchanged at INR 43/MT for the distance slab of 0-3 km. For a distance between 3-10 km, the company has increased STC rates by INR 7/MT to INR 81/MT. For 10-20 km distance slab, same rates were rolled over from the previous revision.

In case, where coal is transported more than 20 km, transportation charges would be payable at actual basis, borne by the buyer.

MCL has stated that the revised charges would be implemented from 00:00 hrs of 1 Feb’20.

Applied Surface Transportation Charges imposed by MCL 

Slab Latest STC Rate Previous Rate Difference
0-3 km 43 43 0
3-10 km 81 74 7
10-20 km 145 145 0

Prices in INR/MT

On the production front, MCL has attained the 100 MnT coal output mark for FY20 as on 22 Jan’20. Notably, the Odisha based subsidiary of CIL has been a member of 100 MnT club of coal companies in India since FY10.