SAIL, NMDC and RINL hope to meet cumulative INR 15,820 crore target

SAIL RINL NMDC to achieve INR 15820 crore CAPEX target in FY14

Business Standard reported that having failed to achieve their capex targets last fiscal, three major state owned firms SAIL, NMDC and RINL hope to meet cumulative INR 15,820 crore target set for the current fiscal.

Expressing hope of achieving their targets at a meeting with Finance Minister Mr P Chidambaram recently, Steel Authority of India has said that its INR 11,500 crore capex target for the current fiscal was on track.

Similarly, Rashtriya Ispat Nigam and country's largest iron ore producer NMDC have also expressed confidence in achieving their INR 1,600 crore and INR 2,720 crore capex targets for the 2013 to 14 fiscal.

These firms, which fall under the Steel Ministry, had failed to come even close to their capex targets last fiscal due to reasons ranging from delays on the part of contractors to unforeseen developments while executing projects.

SAIL had INR 14,500 crore capex target for 2012 to 13 fiscal but it could achieve only INR 9,755 crore. RINL's capex target fell short by over 30% to INR 1,287 crore. NMDC's was the worst at INR 1,607.24 crore compared to the INR 4,655 crore target for capital expenditure for 2012 to 13 fiscal.

The source said that "A warning from the Finance Ministry that it may ask PSUs to declare a special dividend in case of shortfall in targeted capex has triggered a change in the way PSUs used to look at the targets. They are now in a hurry to achieve targets."

SAIL is investing on enhancing capacity at all its five major plants. The investment is part of the INR 72,000 crore that the company is putting in to raise capacity to 24 million tonne per year from 14 million tonne per annum now.

RINL's capex plans involve capacity expansion at its plant at Vizag from 2.9 million tonne per annum to 6.3 million tonne per annum. NMDC's capex is aimed at raising production capacity at its exiting mines.

These 3 firms have set for themselves an ambitious INR 14,925 crore capex target for the 2014 to 15 fiscal. SAIL plans to dole out INR 10,500 crore on capital expenditure, NMDC INR 2,890 crore and RINL the remaining at INR 1,535 crore.

(www.steelguru.com)

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Mr Naveen Jindal chairman of Jindal Steel and Power Limited

JSPL Angul plant to be commissioned by Jan 2014 end

Orissa Diary reported that Mr Naveen Jindal chairman of Jindal Steel and Power Limited met Odisha Chief Secretary Mr JK Mohapatra and discussed about the development of JSPL’s Angul plant.

Later speaking to media Mr Naveen Jindal said that JSPL’s Angul plant to be commissioned by January end 2014. Investment of more than INR 20,000 crore for JSPL in Angul. About 20,000 persons are working for the project on a war footing. The Coal Gasification Plant and DRI plant will be commissioned by the end of January.

The Angul integrated steel plant with an investment plan of INR 30,000 crore was earlier planned to be commissioned by September end and later was rescheduled to December this year.

However, the 1.2 million tonne per annum Plate Mill capable of producing 5 metre wide plates making it the widest in the country has already started production. Besides, 810 MW Captive Power Plant has also been commissioned.

Besides, the Steel Melting Shop has been made operational in November this year. Mr Jindal added that “We had a very good discussion with the Chief Secretary regarding the progress of Angul steel project. The projects are running as per schedule. But Coal Gasification Plant and DRI Plant will be commissioned by the end of January.”

(www.steelguru.com)

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Iron ore ports in Australia

Cyclone Christine heads inland after battering iron ore ports in Australia

Reuters reported that Australia's Pilbara iron ore shipping and mining region, the world's largest, faced cyclonic winds and torrential rains on Tuesday after a cyclone made landfall after intensifying over the last few days in the Indian Ocean.

The key shipping ports of Dampier, Cape Lambert and Port Hedland bore the brunt of the storm after clearing dozens of iron ore freighters and evacuating staff over the weekend. Reports of damage were not immediately available.

Cyclone Christine, the second to batter Western Australia in the November 1-April 30 cyclone season, forced mining companies Rio Tinto, BHP Billiton and Fortescue Metals to suspend loading until emergency authorities sound the all-clear, expected over the next day or two.

Winds with gusts exceeding 160 kilometres per hour are possible near the center of the cyclone, easing only slightly as Christine moves inland during Tuesday, according to the Australian Bureau of Meteorology.

A red alert - meaning residents must seek shelter - has been issued for the mining hubs of Tom Price and Paraburdoo, the weather bureau said. The area is home to some of Australia's biggest iron ore mines, including ones owned by Rio Tinto and Fortescue.

(www.steelguru.com)

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Stainless steel from China

Vietnam imposes antidumping taxes over imported stainless steel from China

Xinhua reported that Vietnam's Ministry of Industry and Trade recently issued a decision on application of provisional antidumping measures on certain imported cold-rolled stainless steel.
The ministry said on its website on Friday that the decision was issued on Wednesday, defining the details on application of provisional antidumping duties on certain cold-rolled stainless steel imported into Vietnam originating in China, Indonesia, Malaysia and China' Taiwan.
Cold-rolled stainless steel products which are classified under HS of 7219.32.00; 7219.33.00; 7219.34.00; 7219.35.00; 7219.90.00; 7220.20.10; 7220.20.90; 7220.90.10; 7220.90.90 will be applied provisional antidumping duties, said the ministry.
Specifically, producers from China are defined to suffer antidumping taxes from 6.45% to 6.99%, from Indonesia 12.03%, Malaysia 14.38% and China's Taiwan 13.23% to 30.73%
The ministry said that the current import duty rates of these products are from zero percent to 10%.
The decision takes effect after 30 days from the date of signing. Provisional antidumping duties are applied within 120 days since the decision takes effect.
The investigation of antidumping case was conducted from July 2013 after two Vietnamese companies including POSCO Vst Co Ltd and Inox Hoa Binh Joint Stock Company filed a lawsuit on antidumping over cold-rolled stainless steel imported into Vietnam from China, Indonesia, Malaysia and China's Taiwan.
Source – Strategic Research Institute
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Indian steel player profitability

Demand slowdown overcapacity loom large on Indian steel player profitability

The Hindu reported that as end user demand for steel in India continues to fall, CRISIL Research estimates domestic steel demand to grow at a subdued rate of 2 to 4% in 2013 to 14.

Due to execution delays owing to environment clearances, many construction and infrastructure projects have not taken off as expected.

Slowing economic growth has also put the brakes on consumption-driven sectors such as automobiles and consumer durables.

While near-term demand is expected to remain muted, long-term prospects are forecast to be steady.

CRISIL Research expects steel demand in India to pick up from 2014-15 with an expected pick-up in demand in key end user sectors such as construction, infrastructure and automobiles.

However, growth in demand will be lower compared with the robust growth rate of the last decade.

CRISIL Research estimates domestic steel demand growth at 6 to 7% CAGR between 2013 to 14 and 2017 to 18 compared with around 9% CAGR over the last decade.

This rate of increase will see steel demand in India touching 93 to 94 million tonnes by 2017 to 18.

Since incremental demand for finished steel is expected to be considerably lower the demand-supply gap will widen, when majority of the planned capacities are scheduled to be commissioned.

The widening gap will encourage, even compel, steel manufacturers to increase exports to arrest the expected fall in operating rates.

However, the demand-supply equation globally too is not favouring domestic steel manufacturers.

A shift in China’s focus from investment to consumption, accentuated by weak economic conditions in mature developed countries will force a deep structural slowdown in global steel demand over the next 5 years.

(www.steelguru.com)

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ArcelorMittal Temirtau

ArcelorMittal Temirtau to cut 2500 jobs in 2014 - Union

ArcelorMittal Temirtau is going to reduce the number of jobs by 2,500 in 2014.

Mr Viktor Schetinin vice chairman of Zhaktau steel workers union said that scheduled shutdown of several no longer demanded units is the key reasons behind the personnel axing in ArcelorMittal Temirtau.

He said that "Several shops, that are technologically no longer need, were be shut down. (...) However, these are not actual cuts: these 2,500 jobs will be outsourced.”

Every employer annually plans the number of personnel when making plans for the year. ArcelorMittal Temirtau has approved 12,028 employees for 2014, which is 2,500 less than in 2013. In 2012 the staff of the plant saw a planned cut by 3,000 people.

Mr Schetinin said that "These are not just a cuts, but also voluntary resignations, natural decline, such as death and dismissals for misconduct at work, and for violations like theft.”

Meanwhile, the planned layoffs also look like an attempt to comply with the instructions of the co-owner of ArcelorMittal, Indian billionaire Lakshmi Mittal. He came to Kazakhstan earlier this month to met with the top and mid ranking managers of ArcelorMittal Temirtau plant. He criticized their action plan for the year 2014 and called them put more efforts into decrease the cost of production and remove people from the positions where they are not needed to cut costs. The tycoon promised to invest into the Kazakhstan plant only if it is competitive and makes money.

(www.steelguru.com)

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VAT on iron and steel items

Punjab government slashes VAT on iron and steel items

In a relief to secondary steel makers, Punjab government announced to slash VAT rate from 4.95% to 2.5% on iron and steel items.

Punjab Deputy Chief Minister Sukhbir Singh Badal gave nod in this regard after holding a meeting with the delegation of furnace, iron and steel rolling mills. An official release said that the new proposed VAT regime on iron and steel industry is aimed to enable it to compete with neighboring states and increase in revenue.

As per decisions taken, the rate of VAT on scrap (melting and rolling), ingots/billets/blooms or other semi finished goods, finished goods, inter-state sales would be reduced to 2.5 per cent from 4.95 per cent with surcharge of 10 per cent.

To prevent a practice of bogus input tax credit claim, it was decided to restrict the claim to maximum two stages.

Introducing restructured VAT regime for this sector, the state government has also decided to calculate VAT on the basis of energy consumption by unit.

Official said that "After the implementation of new system, there should be a minimum commitment of production of 1 tonne of finished items with 250 units of consumption of electricity, whereas for furnace units, a minimum commitment of 1 tonne of ingot production with 750 units of electricity has been made.”

The release said that "This new system (of calculating VAT) will eliminate tax evasion and also lead to increase in production by encouraging flow of scrap and raw material into the state.”

Source ; (www.steelguru.com)

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Domestic steel market

Flat steel to vibrate in China amid weak performance later this year

Last week, domestic steel market edged down slightly as a whole with few market transactions. Social inventory began to increase, weakening the market confidence. Among them, flats price is relatively stronger than that of construction steel. Price of HRC and medium plate in key cities endured ups and downs while HRC in most areas remained stable.

Mr Wang Jinsheng vice chairman of Tianjin Association of Metal Material Trade, pointed out that the price of medium plate began to slump after recent increase. Medium plate price of key steelmakers in Handan and WuAn stopped increasing and dropped slightly last Friday. AOG of common plate in North China increased slightly which eased the resources shortage to some extent. It is predicated that flats will vibrate amid weak performance at the end of this year. Also, we shall not omit its possibility of declining.

Mr. Wang pointed out that the aforementioned situation is mainly caused by the following factors:

i) Weekly inventory of HRC began to increase. According to market surveillance, on December 20, inventory of HRC in 29 key cities totaled 3.6024 million tonnes; that in Shanghai was 0.923 million tonnes, Guangzhou was 0.775 tonnes, Tianjin was 0.227 million tonnes, Handan was 0.132 tonnes; CRC inventory reached 1.5314 million tonnes; medium plate inventory amounted to 1.316 million tonnes.

ii) Short of capital at the end of this year also imposed some pressure to the market. Domestic stock and futures market performed weak under the pressure of money shortage, which as a result affect the spot market.

iii) PMI of HSBC manufacturing in December eased back slightly which will impact the market to some extent.

iv) Market transaction is not satisfied after key steelmakers hiking the prices. Angang hiked HRC price for January, 2014 by 50 yuan per tonne following Baosteel and WISCO. Hebei Steel gave no subsidy for HRC in December, which made traders hike the market price, resulting in unsatisfied market transactions.

Source - www.steelhome.cn/en
China steel information centre and industry database
(www.steelguru.com)

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Demand of long steel in India

Lending rate surprise roll over might kindle demand of long steel in India

Coming in the backdrop unrelenting inflationary pressure pushing WPI to 7.52% in November, the fastest since September 2012 and 7.05% in October RBI announced roll over of lending rate. It sends an affirmative signal about the desperation inherent in policy makers to let lose credit lines to ignite production and demand.

Achilles heel CPI inflation surged to a record 11.24% giving nightmares to the government. Realistically the inflation in food items is an off shoot of failure to invest in productivity improvement and in creating infrastructure for cold storage and logistics chain to handle the temporary glut and shortages. However the manufacturing sector has to bear the brunt in the short term culminating in catastrophic impact on industrial production and demand. Ramifications have been exponentially devastating crippling the demand from core sectors viz., automobile, construction, white goods, infrastructure projects etc.

The high interest rates have slowed down investment in new capacity creation and, therefore, the pace of job creation as well. This is a dangerous situation for a nation adding 15 million people to workforce every year. High interest rates have exacerbated the debt burden of companies passing through a difficult phase for reasons of stalled projects, unclear policy framework or down cycle.

RBI has hiked lending rate twice by 25 basis points each marking an achievement against heavy odds. The Reserve Bank of India (RBI) in its monetary policy review yesterday kept short-term lending rate unchanged at 7.75 per cent, while the cash reserve ratio (CRR) remained at 4 per cent.

Coming on the heels of surprise roll over Country's largest bank SBI cut home loan rates by up to 0.4 per cent for new borrowers. Even though steel market has not reacted quickly expectations are rife about moderate turn around in market sentiments in twilight of FY13-14.

Source – Strategic Research Institute

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Chinese steel market in limbo

Production drop and low winter off take keeps Chinese steel market in limbo

Latest production release by CISA shows downtrend in production of steel in early December. December (Dec. 1-10) this year the average aggregate daily crude steel output of large and medium-sized steel enterprises in China totalled 1.6951 million tonnes, down 0.81 percent compared to late November (Nov. 21-30). Meanwhile, the average aggregate daily crude steel production of all steelmakers in China in early December was estimated at 2.0129 million tonnes, indicating a decrease of 3.7 percent compared with late November.

Inventory of the main finished steel products in the major steel markets in China totalled 13.2113 million tonnes, up 1.99 percent as compared to the figure recorded on November 30 showing lukewarm off take during winter.

As mentioned earlier production has taken beating owing to Chinese government diktat to cut down 50% power consumption in Hebei region in a bid to reduce pollution. It has come as double whammy during a season typically beset with slow demand. Understandably inventory levels have shown increase despite curtailed production.

Class 12-Dec 19-Dec Change
CLPPI 6226 6206 -20
CFPPI 5629 5623 -6
CHISPI 5888 5876 -12

CLPPI – Chinese Long Product Price Index
CFPPI – Chinese Flat Product Price Index
CHISPI – Chinese Steel Price Index

Source – Strategic Research Institute

(www.steelguru.com)

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Rebar and billet market

Sluggish rebar and billet market takes toll of steel scrap purchase

Ironically winter seems to be freezing the scrap transactions this year. Traditionally winter has been a period of brisk scrap business followed by improved price levels owing to shortage and inventory buildup by Turkish mills before the winter holidays in Europe, USA and Russia.

However this year tide has ebbed prematurely with scrap levels stagnating around USD 397-400 per tonne, CFR, Turkey levels for over a week. Likewise offers at hiking the levels of A3 scrap from Russian and Eastern European countries have turned out to be cropper with no significant interest at USD 385-390 per tonne, CFR Turkey.

Main reason for this uncanny pattern has been dipping sentiments in long market with rebar and billet levels losing about USD 5-7 per per tonne during the last 10 days.

All this is happening amidst low inventory levels with Turkish mills and January booking still remaining unfulfilled. Amidst slow booking from UAE buyers as plenty of domestic rebar is available rebar levels have been booked at USD 586-587 per tonne, theoretical weight, recently booked. The gap between scrap and billet being squeezed and the export levels of rebar coming down mills are opting to buy billet from CIS sources rather than go for scrap purchase.

Despite slow demand for scrap some improvement is unavoidable during the next fortnight with shortage of scrap as well as billets owing to freezing of Black Sea ports during winter leading to scuttled supply.

Source – Strategic Research Institute
(www.steelguru.com)

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Iron Ore Price

Iron ore price levels collapse with dwindling demand from Chinese mills

Chinese iron ore market seems set for low phase with heavy hand of Chinese government falling over the steel production and ensuing demand of iron ore from the mills. A recent notice from municipal government to cut down power consumption by 50% from the average level in the first ten months of this year during December has plummeted buying by the mills.

Iron ore inventory at 43 Chinese ports stood at 84.45 million tonnes as of December 13th down 0.95 million tonnes from December 06.

Given current steelmaking activities in China, we estimate port inventories are of 25.89 days of consumption, down 0.3 day from December 06.

In view of the healthy inventory levels and subdued buying price level are likely to remain low in coming week.

Grade Change %
Fe 63.5/63% -3.10%
Fe 60/59 % -3.30%
Fe 56/55% -3.90%
Fe 52/51 % -4.70%

Change is on 16th December 13 as compared to 13th December 13

Source - Strategic Research Institute

(www.steelguru.com)

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Chinese steel price

Chinese steel price stabilize on production fall and dipping inventory

Chinese steel mills are whimpering under the recent fait accompli of local governments to cut down on power consumption during December by 50% to reduce pollution. Impacting the steel hubs of Hebei production has suffered in November is likely maintain downtrend in December as well.

According to the figures from National Bureau of Statistics (NBS), China has produced 712.86 million tonnes of crude steel in the first eleven months of this year, up 7.8 percent year on year.

However in November, production of crude steel was 60.88 million tonnes, up 4.2 percent year on year. Daily crude steel production was 2.029 million tonnes, down 3.3 percent month on month.

Slippage in production has been complimented by drop in the inventory levels of long and flat products. Long and flat product inventory levels have dropped as follows during the last week

WRC : -3.72%
Rebar : -11.13%
HRC : -4.6%
CRC : -2.88%
It is expected that with production under pressure and even at below average level of demand inventory levels will shrink further thereby imparting stability to modulated buoyancy in steel prices in coming weeks.

Class 29-Nov 17-Nov Change
CLPPI 6188 6225 37
CFPPI 5625 5631 6
CHISPI 5869 5888 19

CLPPI – Chinese Long Product Price Index
CFPPI – Chinese Flat Product Price Index
CHISPI – Chinese Steel Price Index

Source - Strategic Research Institute

(www.steelguru.com)

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Demand zero duty on stainless steel

Plant & Machinery and capital goods manufacturers in the country have demanded zero% duty on stainless steel and special steel due to steep devaluation of Indian Rupee.

Mr V P Ramachandran, Secretary General of Process Plant and Machinery Association of India said that “The Capital Goods manufacturing companies exporting Process Plant machinery have urged the Union Ministry of Finance and Commerce to remove duties on import of high grade stainless steel hot rolled sheets, coils and cold rolled products not currently manufactured in India. Government had imposed anti dumping duties as well on imports originating from European Union, South Korea, Taiwan and USA and South Africa despite the fact that there are so many grades and forms which are presently not manufactured in India.”

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