Monthly Archives: June 2020

TATA Steel Mining inks lease deeds for Kamarda, Saruabil blocks

Tata Steel Mining Limited (TSML), formerly known as TS Alloys Ltd has successfully completed the mining lease execution for two leases namely Kamarda Chromite Mine and Saruabil Chromite Mine in Jajpur district in Odisha on June 26, 2020.

The agreements were formally signed by Ranjan Kumar Das, Jajpur collector and M C Thomas, Managing Director, Tata Steel Mining Limited at Jajpur.

These mines were auctioned by the Odisha government and the leases are granted for a period of 50 years. Among the commercial leases expired on Mar 31, 2020, and auctioned, these are the first leases to be converted into mining leases across India.

After becoming the highest bidder, the company was given a Vesting Order by the Odisha government in May 2020. TSML has completed all steps such as upfront payments, execution of Mine Development and Production Agreement (MDPA) as well as maintaining all other eligibility criteria. The Odisha Government, on its part, granted vesting order with all the clearances for two years as well as declared the company as a successful bidder before formally communicating the grant order enabling the lease for execution.

M C Thomas, Managing Director, TSML, said, “We thank the Government of Odisha for the exceptional support in processing these approvals in less than 30 days from the date of LOI. The coordinated efforts by various Odisha Government agencies led by the Department of Steel & Mines, District-Collector at Jajpur and other officials have made this possible in these unprecedented times. We consider this a significant milestone for Tata Steel Mining Limited. We are looking forward to embarking on this journey with the active support of the State of Odisha and all our stakeholders”.

As a responsible corporate, Tata Steel Mining is committed to excellence in governance and treats all its stakeholders as partners in long-term value creation.

TSML is a 100 per cent subsidiary of Tata Steel Limited and is headquartered in Bhubaneswar, Odisha. The company is working to develop commercial mining opportunities in addition to ferro-alloys business.

 

Tata Steel FY20 results- key highlights

Tata Steel conducted investor conference call today for FY20, key highlights of the same are mentioned below:

1.Crude steel output from India operations up by 8% –The Company showed improved performance and churned out 18.20 mn t of crude steel in FY’20, up by 8% as against 16.81 mn t in the previous fiscal. The ramp-up at TATA Steel BSL and acquisition of the Usha Martin steel business by Tata steel long products (TSLP) attributed to the improved performance. In similar lines, on a quarterly comparison, the same increased by 6% to 4.73 mn t in Q4 FY ’20 as against 4.47 mn t in the preceding quarter.

2.Steel deliveries grew by 4% y-o-y-Steel deliveries from India grew by 4% annually to 16.97 MnT in FY’20 as compared to 16.26 mn t in the previous fiscal. Branded Products & Retail segment deliveries grew by 8% y-o-y in FY20.

However, on a q-o-q basis, the deliveries declined by 17% in Q4 to 4.03 mn t against 4.85 mn t a quarter ago due to the nationwide lock-down in late Mar’20.

3.Tata BSL Steel achieves its best ever crude steel output- On the back of higher capacity utilization and marketing synergies, along with improved maintenance practices, the TATA Steel BSL was capable of clocking its best ever crude steel output. The crude steel output stood at 4.46 mn t and sales at 4.14 mn t while EBIDTA witnessed a monstrous increase by 173% q-o-q to INR 775 cr in Q4.

4.EBITDA dropped by 26% in FY ’20- Tata Steel India EBITDA witnessed a significant decline of 26% to INR 17,650 Cr in FY’20 in contrast with INR 23,934 Cr in FY19. However the same witnessed quarterly increase by 11% in Q4 to INR 4,568 Cr as against INR 4,110 Cr in Q3.

5.Tata steel European operations overview- Company’s liquid steel production declined to 10.26 mn t in FY 20. Meanwhile, deliveries went down by 4% on a yearly basis to 9.29 mn t in FY20 due to limited economic activity.

Implementation of the transformation program to make operations stronger and sustainable. Also engaged with governments across different territories to seek support in terms of loans/grants, reimbursement of manpower cost.

6.Company increased exports to offset dull domestic demand-Towards the end of Mar’20 company shifted its focus to exports amid lock-down in the domestic market.  The company mainly exported semis, Hot rolled coils and cold rolled coils to Vietnam, China, and UAE. In FY20, company exported 2.4 mnt steel compared to 1.65 mnt in FY19. The company expects that in Q1 exports will be 50% of its production and the percentage of exports will gradually decline as the domestic sales improve.

7.Coking coal prices are expected to move up in Q1-Coking coal prices are expected to rise with recovery in steel production levels amid a relaxation of lock-down measures in key markets

8.Iron ore prices may soften-Seaborne iron ore prices are buoyed by strong demand from China, however, expected to soften on improving supply.

9.Domestic steel prices expected to rebound– Domestic steel prices are expected to find support with recovery in demand and robust raw material prices since the demand is expected to improve gradually with phased removal of lock-down and increase in government spending. Also, improved demand is expected from the rural pipeline, and select territories where COVID-19 impact is less.

10.Auto contracts under negotiations-Company is negotiating contracts with auto companies which is on a half-yearly basis. Previous contracts were made in Oct’19 which will be renewed and are under negotiation. However, the prices will decline against the second half of last year.

 

Rationale: Indian pellet index stable in recent deals

SteelMint’s bi-weekly domestic pellet index “PELLEX” has remained unchanged on Tuesday (i.e 30th June 2020) at INR 5,900/t DAP Raipur. This price has been derived using five data points: i.e trades, offers, bids, substitute parity, and export realizations. You can download the detailed methodology by clicking on this link Click here

Assigning weightage to data points

1. Three transactions of 30,000t in total were reported at INR 5,900/t (DAP, Raipur) in this publication window. This transaction was given a 57.1% weightage in the index.

2. Eight offers were considered for calculation in this window with an average price of Rs 6,056/t (DAP Raipur) and given a weight of 14.3%.

3. No firm bids were recorded in the publishing window. No weightage has been assigned.

4. SteelMint calculated the price at which Raipur pellet can displace NMDC lump in the sponge rotary kiln feed (substitute parity) on a DAP Raipur basis at Rs 5,700/t and given a weight of 14.3%. It may be noted that NMDC has increased its iron ore prices (w.e.f 30th Jun)

5. The export realization was calculated by SteelMint at Rs 5,950/t DAP Raipur based on a FOB east coast assessment of $97/t on 30 Jun’20 and was given a weightage of 14.3%. However, no deal has been concluded so far this week.

Calculation of Index-:

Source-: SteelMint

 

Indian steel market update- 30 June’20

Indian billet & sponge iron prices fell further in major locations by INR 100-300/t except in central India – Raipur where sponge prices remained strong and surged about INR 400/t due to renewed buying amid supply shortage in spot market.

In context to rebar, prices dipped by INR 100-400/t with majority of markets assessed fall of INR 200-400/t due to poor off take along with limited inquiries.

SteelMint’s price assessment for induction furnaces billet in Indian market stood at INR 26,900-30,900/t ($356-409) EXW.

Further, the coal-based sponge (78-80 FeM) C-DRI price assessment was at INR 15,400-17,000/t ($203-225); prices are EXW & excluding GST.

Rupee & BSE Sensex

— On 30th June 2020 (Tuesday) INR to USD exchange rate stood at INR 75.55.

— ICEX (Indian Commodity Exchange Ltd) Aug’20 contract for STEELLONG today open at INR 30,200/t & last traded (IST 17:30 hrs) at INR 30,110/t.

— BSE Sensex closed at 34,915(-45) on Tuesday, as against last day (Monday) at 34,961(-209).

— NSE Nifty50 index was closed today at 10,302(-10) & Nifty Metal at 1,991(+1).

Raw Material

— Serajuddin has increased iron ore lump (5-8 mm, Fe 63%) offers by INR 300/t ($ 4) effective from today (30 Jun’20) to INR 3,800/t (ex-mines, including Royalty, DMF, & NMET)

— NMDC has raised iron ore prices w.e.f today (30 Jun’20). Prices of lump and fines have been increased by INR 200/t and that of DR CLO by INR 240/t from its Chhattisgarh mines.

— Monnet Ispat sold around 50-60t Silico Manganese (60-14) at INR 61,750/t EXW, Raipur- Officials.

Semi Finished

— Mid scale mills export offers to Nepal slightly fall to $350-353/t for billet & $405-407/t for Wire rod, ex-mill at Durgapur.

— Neo Metaliks in Durgapur has kept steel grade pig iron prices firm at INR 24,400-500/t EXW.

— SAIL auction of 3,000t steel grade pig iron today from Bhilai Steel Plant (BSP) has received good response as the bids for entire quantity fetches in the range of INR 23,000-23,200/t EXW, as per participants.

— Raipur based sponge producers have reported healthy orders for P-DRI at INR 15,700-900/t, hence offers raised today by INR 300-400/t to INR 16,000-16,100/t, EXW.

— Rashmi Metaliks has further lowered sponge P-DRI offers by INR 300/t to INR 15,700/t FoR Durgapur, as per sources.

— Bhaskar Steel and Ferro Alloy Ltd, an Odisha based plant offered FeM 80 C-DRI at INR 16,000/t & Billet at INR 26,700-26,800/t EXW.

— Raigarh based Singhal Steel offered P-DRI at INR 15,500/t & Billet at INR 26,900/t ex-Raigarh.

— Billet deals reported at INR 27,600-27,700/t FoR Raipur from Raigarh based manufacturers.

— BIOP Steels in South India has kept offers unaltered; offering FeM 80 & 82 C-DRI lumps at INR 15,400/t & INR 15,700/t EXW, Karnataka.

— BMM Ispat, a renowned sponge manufacturer offered FeM 80 P-DRI lumps at INR 15,100/t ex-Bellary & around 2,500 t deals reported in nearby region.

Rebar (12 mm)

— Rathi Stelmax TMT is offering at INR 34,500/t EXW Delhi/NCR.

— Paras TMT offers at INR 33,500/t EXW Muzaffarnagar.

— GK TMT offering at INR 33,300/t EXW Raipur (Down by INR 400/t).

— Scan Group (Shrishti TMT) is offering at INR 31,300/t EXW Raigarh.

— BS Sponge (BS TMX TMT) is offering at INR 30,600/t EXW Raigarh.

— Bajrangbali Steel Industries Pvt Ltd is offering rebar at INR 31,100-31,200/t EXW Rourkela.

— Odisha based Shubhlabh TMT offers reported at INR 31,300-31,400/MT EXW.

— Kalika TMT is offering at INR 32,500/t EXW Jalna (Down by INR 300/t).

— Diamond TMT offers at INR 34,000/t FoR Ahmedabad.

— Hyderabad based Shalini Steels (SS GOLD TMT) increased offers by INR 200-300/t to INR 33,000/t post deals of around 2,000 t at INR 32,700-800/t EXW.

— Trade discount given by Raipur based heavy structure manufacturers is at INR 600-800/t and trade price of 200 Angle is at INR 34,100-34,400/t EXW.

Wire Rod & Pipe

— Trade discounts in Raipur wire rod is hovering at INR 1,000-1,200/t, also base price firm at INR 31,500/t EXW. However, in Durgapur trade reference prices drop by INR 200/t to INR 31,300-700/t EXW.

Reference prices as on 30th Jun’20

Particular/Delivery Size, Grade, Origin Prices Min Max Change 1W 1M
Scrap Ex-Alang HMS(80:20) 20,800 20,700 20,900 – 100 21,000 22,000
Ex-Mumbai HMS(80:20) 20,000 19,900 20,200 + 100 19,400 21,000
Ex-Chennai HMS(80:20) 21,200 21,100 21,400   0 21,000 21,000
C-DRI Ex-Durgapur Mix, FeM 78%, +/-1 16,600 16,500 16,700 – 200 16,500 16,900
Ex-Rourkela Mix, FeM 80%, +/-1 15,900 15,800 16,000 – 100 15,600 16,500
Ex-Raipur Mix, FeM 80%, +/-1 17,000 16,900 17,100 + 400 15,900 17,100
Ex-Bellary Lumps, FeM 80%, +/-1 15,400 15,300 15,500   0 15,400 16,000
P-DRI Ex-Durgapur Lumps, FeM 78%, +/-1 15,600 15,500 15,700 – 300 15,500 15,900
Ex-Raipur Lumps, FeM 80%, +/-1 16,000 15,900 16,100 + 400 15,000 16,150
Ex-Bellary Lumps, FeM 80%, +/-1 15,100 15,000 15,200   0 15,100 15,950
Ex-Hyderabad Lumps, FeM 80%, +/-1 15,600 15,500 15,700   0 15,600 16,800
Ingot Ex-Mandi Gobindgarh 3.5 x 4.5 Inch, IS 2830 30,750 30,700 30,800 – 150 30,550 31,200
Ex-Durgapur 3.5 x 4.5 Inch, IS 2830 27,150 27,100 27,200 – 250 27,000 27,900
Ex-Rourkela 3.5 x 4.5 Inch, IS 2830 26,700 26,600 26,800   0 26,250 28,000
Ex-Raipur 3.5 x 4.5 Inch, IS 2830 27,350 27,300 27,400   0 27,000 28,600
Ex-Mumbai 3.5 x 4.5 Inch, IS 2830 27,200 27,100 27,300 – 200 27,100 28,900
Billet Ex-Mandi Gobindgarh 100x100mm, IS 2831 30,900 30,800 31,000 – 100 30,700 31,400
Ex-Durgapur 100x100mm, IS 2831 27,400 27,300 27,500 – 300 27,500 28,400
Ex-Rourkela 100x100mm, IS 2831 26,900 26,800 27,000   0 26,600 28,600
Ex-Raipur 100x100mm, IS 2831 27,450 27,400 27,500 – 150 27,300 29,100
Ex-Ahmedabad 100x100mm, IS 2831 28,500 28,400 28,600 – 100 28,500 29,400
Ex-Mumbai 100x100mm, IS 2831 27,400 27,300 27,500 – 200 27,400 29,300
Ex-Chennai 100x100mm, IS 2831 29,500 29,300 29,600 + 100 29,500 30,200
Ex-Hyderabad 100x100mm, IS 2831 28,500 28,400 28,600 + 500 27,500 29,500
TMT Ex-Delhi/NCR 12-25mm, Induction Grade, IS 1786- 500 Fe 34,500 34,200 34,600 – 400 34,500 37,100
Ex-Durgapur 12-25mm, Induction Grade, IS 1786- 500 Fe 31,600 31,400 31,800 – 400 31,700 34,000
Ex-Rourkela 12-25mm, Induction Grade, IS 1786- 500 Fe 31,100 30,900 31,200 – 200 31,400 34,700
Ex-Raipur 12-25mm, Induction Grade, IS 1786- 500 Fe 30,900 30,800 31,000 – 400 30,900 34,900
Ex-Jalna 12-25mm, Induction Grade, IS 1786- 500 Fe 32,200 31,900 32,300 – 400 32,400 36,000
Ex-Mumbai 12-25mm, Induction Grade, IS 1786- 500 Fe 31,600 31,300 31,700   0 31,600 34,100
Ex-Chennai 12-25mm, Induction Grade, IS 1786- 500 Fe 35,400 35,200 35,600   0 35,600 36,200
Ex-Hyderabad 12-25mm, Induction Grade, IS 1786- 500 Fe 32,700 32,500 32,800 + 400 32,000 34,500
Wire Rod Ex-Durgapur 5.5 mm, Wire Rod, Induction grade 31,400 31,300 31,800 – 200 30,800 33,200
Ex-Raipur 5.5 mm, Wire Rod, Induction grade 31,000 30,500 31,500   0 29,900 33,000

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

 

Weekly- Global HRC and CRC market overview

China HRC export offer move up post festive holidays-

Nation’s steel manufacturers increased their HRC export offers by $5/t post the Dragon Boat Festival. Current offer stands at $445-450/t FoB China, as against $440-445/t FoB basis at the end of the previous week.

On the other hand, domestic HRC prices declined by RMB 10-20 d-o-d basis to 3,710-3,730/t (Eastern China) on weakening market sentiments since 26 regions in China had been impacted by the flood in the previous weekend, and a forecast of heavy rains to persist over the next few days.

Further, the local government of Tangshan province has ordered the suspension of blast furnaces and sintering equipment from 1 Jul’20 until 30 Sept’20 to check the air pollution.

Indian HRC export offer remains firm –

Indian steel manufacturers have kept their offers at a higher range on the back of decent bookings in the recent past and improving global HRC export offers.

The current week offers for HRC (SAE 1006, 2 mm) stand at $ 445-450/t CFR Vietnam basis, while that for HRC (SS 400) at $455-457/t CFR basis.

Also, the offers for positioned cargoes are at $438/t CFR Vietnam basis.

Imported HRC offers to Vietnam remain stable on the week-

The offers from major importing nations have remained unchanged over the week due to:

* Limited buying interest amid ongoing negotiations with domestic producer Formosa.

* Sufficient inventories due to decent import bookings in the recent past.

* Monsoon rains to impact the demand in the nation.

Pakistan’s imported HRC remains dull on limited inquiries-

The demand for the HRC in the nation was weak as the importers held sufficient inventories in hand. Few of them have already concluded deals in the past few weeks and are booked until Aug’20, SteelMint learnt from Pakistani sources.

However, Karachi and Lahore city are in lockdown until 2 Jul’20.

Imported HRC offers to Pakistan

* Taiwan- The offer stands at $450/t CFR basis.

*South Korean and Japanese steel manufacturers are offering at $455/t CFR basis.

UAE’s imported HRC market dull amid high offers-

Demand in the Middle East is also weak at the moment. There is a significant gap between the bids and offers, which has kept the UAE importers at sidelines.

Indian mills are offering HRC at $440-450/t CFR basis, while the importers are bidding at $430/t CFR basis.

However, offers from China are around $ 460-470/t CFR basis.

CIS origin HRC export offer stable over the week-

The export offers from CIS nations continue to hover at $405-415/t FoB Black Sea, unchanged over against the previous week offers.

In the previous week, the offers had increased amid improving demand and higher production costs.

Source: SteelMint Research

 
BCCL Exclusive Auction Results

BCCL’s coal allocation under auction for non-power sector down by 44% in Jun’20

Bharat Coking Coal Ltd (BCCL), the prime coking coal producer in the country, has witnessed sales volume come down in the exclusive auction that was recently concluded on 26 Jun’20.

The auction marked specially for non-power consumer recorded booking of 63,900 t coal, which decreased 44% m-o-m compared with 113,600 t noted in the auction conducted on May’20.

Envisaged as the second phase of exclusive auction for FY21, the company had offered 100,000 t coking coal in the current round for an extended lifting period of three months (Jun-Aug’20) against the sold quantity. However, the sales failed to replicate the response that was seen in the previous term.

Incidentally, in the first phase of auction, a higher volume of 114,000 t was put forward for sale, out of which only 400 t was left unsold. Besides, the booked volume round had received substantial bids over the reserve price.

On the other hand, in the current phase of auction, barring the premium grade W-II, rest of the lot was booked at base price.

Grade-wise bids received in the current auction are elaborated below:

(a) W-II coal offered across BCCL’s two collieries had fetched bids in excess of INR 1580-1654/t over the base price of INR 4416/t. A gradual improvement was observed from the previous term, where premium of INR 1345/t was noted.

(b) A price cut of INR 179/t was not enough to incite higher sale of W-IV coal offered from Phularitand colliery, which was rather booked at reserve price. Contrarily, the same grade of coal offered from ENA colliery in the previous round had fetched premium of INR 2321/t over the reserve price of INR 3326/t.

Source Grade Quantity Offered Quantity Booked Reserve Price Avg Bid Price
Bhowrah (S) 3 Pit W-II 30,000 29,550 4416 6070
Chandan W-II 10,000 10,000 4416 5996
Godhur W-III 20,000 17,700 3312 3312
Phularitand W-IV 40,000 6,650 3147 3147

Quantity in metric tonne (t)
Prices in INR/t

 

Pakistan: Imported scrap prices inch down in recent trades

Imported scrap prices to Pakistan fell in recent trades in containers, while buyers continued average trades, with several deals reported. Offers have continued to fall amid an ongoing downtrend in the international market, with participants expecting slight further price correction.

SteelMint’s assessment for shredded 211 from UK/Europe stands at $275/t CFR Qasim level, dropping by around $ 4-6/t against the opening of last week when offers were recorded at around $ 278-280/t CFR. Some decent quantity of Shredded 211 sold at $275/t CFR from yards in UK in recent days, while last week few deals from some premium yards were reported at $ 277-278/t CFR.

A Karachi based steel manufacturer booked a shredded at $ 275-278/t CFR from UK/Europe, as per quality during last week closing. USA origin shredded is being offered at around $270-273/t and deals were concluded at $270-271/t CFR from the USA, in the last 1-2 days.

“Mostly demand is stable in the market with mills continuing to procure regularly, in spite of falling prices, given the unpredictability of the market” shared a steelmaker in Punjab region.

Most industry participants on the buyers’ side as well as traders maintained that prices may fall further by later this week, while buying will continue on consistent demand, however, for the demand from end users to reach regular levels of last year, it will still take considerable time.

HMS scrap offers remained less, with few offers from Middle East (Kuwait, Bahrain and Dubai) origin being reported at $ 265-270/t CFR Qasim, for higher grade HMS 1 (no ci gi), while lower grades of HMS (1&2) were offered upwards of $250/t level.

Domestic Market:

Domestic steel market mostly remained stable this week with no major changes in price. Additionally, already subdued steel sales further slowed down due to ongoing closing of the financial year 2019-2020. Deformed bar prices remained stable at PKR 112,000-113,000/t for Punjab and PKR 113,000-114,000/t for South region, ex plant basis, inclusive of taxes.

Local scrap prices (eq to Shredded) observed a fall by PKR 1,000/t this week and stood at PKR 70,000/t inclusive of taxes, following the falling trend of imported scrap amid steel prices.

Particular (Average Selling Prices) 30-June’20 Last assessment on 23-June’20 Change
PKR/MT PKR/MT PKR
Local Scrap (Equivalent to Shredded) 70000 71000 -1,000
Bala (Local Billet) 93000 93000 0
CC Billet (Grade 40) 96500 96500 0
CC Billet (Grade 60) 97500 97500 0
Deformed bar (G-60), Ex-Punjab/KPK 112,000-113,000 112,000-113,000 0
Deformed bar (G-60), Ex-Sindh (Karachi) 113,000-114,000 113,000-114,000 0
 

Iran aims 30 mn t crude steel output in 2020-21

Iran’s crude steel output is expected to touch 30mn t in the current Persian year (21 Mar’20-20 Mar21) amid expansion of capacity in the steel sector, said Iran’s deputy minister of industry, mines and trade Darioush Esmaili.

Iran produced 31.9 mn t crude steel in calendar year 2019, according to the World Steel Association. Iran expects to become the eighth largest steel producer by 2025, said Esmaili. The country has set a target of producing 55 mn t crude steel by 2025.

Iran, the largest steel producer in the MENA region, produced 11.44 mn t crude steel during Jan-May 2020, a growth of 11% y-o-y from 10.28 mn t in the same period of the previous year. Iran’s May crude steel output increased by 8.9% y-o-y to 2.35 mn t.

Iran has around 2.80 bn t iron ore reserves and would need to produce 160 mn t ore each year as crude steel output rose to the 55 mn t level, said Esmaili. Given its rapidly growing domestic needs, Iran needed to conserve iron ore for its own use to supply the steel sector for a long period.

Referring to the recent ban on iron ore exports, he said Iran will focus on producing more pellet and concentrate instead of exporting fines. Iran exported over 20 mn t of unprocessed iron ore a decade ago, while the export decreased to 6 mn t last year.

Recently, one of the subsidiary companies of mining conglomerate IMIDRO, Sangan Iron Ore Complex, started trial production at its two greenfield iron ore concentration plants, which is equipped to produce 2.5 mtpa each. The project is expected to get commissioned by the end of this month. The complex has 1.20 bn t mineral reserves, with a production target of 17mn t pa concentrate and 15mn t pa pellets.