Announcement

Wednesday, January 15, 2014

World's largest steel trader

Lenders extend Stemcor debt standstill to end-Feb

Reuters reported that Lenders to Stemcor, formerly the world's largest steel trader, have extended its debt standstill agreement to the end of February, allowing it more time to restructure a USD 1.25 billion debt.

The private British firm, controlled by members of the Oppenheimer family which includes opposition Labour Party lawmaker Mr Margaret Hodge is under pressure to sell its iron ore assets in India in order to repay its debt.

The assets, which include an iron ore mine and processing facilities in Odisha, have been valued by an industry source at USD 700 to 750 million, though that number is subject to change if the state beefs up its mining laws.

Output from Odisha the largest iron ore-producing state could be affected after a government-appointed panel, the Shah Commission, submitted a report highlighting illegalities in mining.

India's iron ore exports are down by about 85% or 100 million tonne over the past 2 years as the government imposed export bans in Karnataka and Goa in an attempt to clamp down on illegal mining.

India's second largest lender by assets has lent Stemcor INR 5.87 billion, with Stemcor's Indian assets as a collateral and is worried that a sale could jeopardise a payback.

Like many steel companies, Stemcor was hit hard by the global financial crisis. The company failed to refinance an $850 million syndicated loan that was due to mature last May, and has since concluded four standstills. Under a standstill, lenders agree not to ask for repayment and work with the company to restructure the debt. Lenders to Stemcor include ABN AMRO Bank, HSBC, ING, Natixis and Societe Generale.

(www.steelguru.com)

US challenges China

US challenges China non compliance in WTO CRGO steel dispute

Mr Michael Froman US Trade Representative announced that the United States is requesting that China enter into consultations regarding China's claim that it has brought its duties on US exports of grain oriented flat-rolled electrical steel (GOES) into compliance with WTO rules. AK Steel Corporation, based in Ohio, and Allegheny Ludlum, based in Pennsylvania, manufacture GOES.

China's actions cut off more than USD 250 million in exports of this high tech steel product and in 2012 the United States won a dispute at the WTO that China broke WTO rules with its imposition of antidumping and countervailing duties on GOES. The United States continues to pursue this dispute to ensure that China follows through on its obligations under the ruling and does not further harm US exports and the American workers and firms that make them, by abusing trade remedies. This is the first time the United States has initiated a proceeding in the WTO to challenge a claim by China that it has complied in a WTO dispute.

Ambassador Froman said that "Supporting American jobs is our number one job. And to ensure that Americans see the full benefit of the rules and market access we have negotiated in our international trade agreements, the President put enforcement of America's rights in the global trading system on a par with opening markets for US Exports. The WTO found that China's duties are inconsistent with WTO rules. We were right, and China was wrong. Unfortunately, it appears that China has not corrected those inconsistencies. Today's action shows that when the United States steps up to the plate on trade enforcement, we will follow through."

(www.steelguru.com)

Thursday, January 9, 2014

Valuation of Indian iron ore

Valuation of Indian iron ore assets of Stemcor falls - Report

Financial Express reported that Stemcor India, which had put up its assets in India for sale since September, has seen its valuations tumble to almost 50% of what was earlier quoted when the asset was first put on the block.

According to sources in companies currently looking at buying the assets, their current value is being pegged at not more than INR 3,500 to 4,000 crore or roughly in the range of USD 600 million, against an earlier estimated figure of USD 1 to 1.2 billion.

This is a downward revision since September 2013 and ushers in better negotiation power for companies like JSW Steel, Jindal Steel and Power, Essel Mining of the Aditya Birla Group, Essar Steel and Visa Steel.

In fact, with the interested bidders now progressing with their due diligence of the 2 main assets of Stemcor India and their accounts, startling revelations have come out forcing the interested companies to look at Stemcor India as not an out an out attractive buyout.

This has been accentuated with the Justice MB Shah Commission’s debilitating report released on December 26th accusing most of the mining companies in Orissa of being involved in illegal mining.

The Commission report had said that all 55 mines around the Baitarni river and its tributaries should not be allowed to operate till the time their environmental approvals are revisited.

A top official in the Orissa government’s mining department, while refusing to divulge any more information said that “Almost all major companies are part of the Baitarni river iron ore belt and Aryan Mining is one of them.”

Aryan Mining, which is the shining jewel in Stemcor India’s crown, is also embroiled in litigations apart from the allegations of the Commission report. In 2012 to 13, the company had to keep its operations shut for almost 7 months as the state government had initiated investigation of various statutory compliance being carried out by the mining department.

(www.steelguru.com)

Chinese steel rebar

Chinese steel rebar futures at SHFE clings to contract lows

Chinese steel futures drifted to near contract lows on Thursday, as poor demand in the world's top consumer weighed on prices.

The most-traded May rebar contract on the Shanghai Futures Exchange ended 0.2 percent lower at 3,456 yuan a tonne, not far from a low of 3,449 yuan hit on Wednesday, its weakest since the contract was launched in April 2009.

Slower demand and tougher environmental checks have forced steel mills in the world's biggest producer to cut output significantly, easing a supply glut. China's average daily steel output fell 2.7 percent to 1.961 million tonnes in the last 11 days of December from the preceding 10-day period, dipping below 2 million tonnes for the first time since early February 2013.

(www.steelguru.com)

Coal Imports into India

Coal Imports into India cross 140 million tonne mark in 2013

Based on preliminary data from major ports, imports of various types of coal and coke into India during 2013 have totalled 141.509 million tonnes

While thermal coal import, estimated at 107.8 million tonnes, accounted for about 76%, coking coal import is estimated at about 30.7 million tonnes. The other products like met coke, pet coke and coke nut accounted for about 2%

Australia remained the top supplier of coking coal with about 84% share. For thermal coal Indonesia was the major supplier with about 75% share. For met coke, Chinese dominance at about 56% was somewhat diluted with supplies coming from 9 other nations.

The highest monthly imports took place in July 2013 at about 13.4 million tonnes with monthly average for 2013 at 11.79 million tonnes per month

Ports on Western Coast received about 69 million tonnes, followed by Eastern Coast at about 50 million tonnes and Southern Coast at 21 million tonnes. The highest imports occurred at Mundra 33.1 million tonnes, followed by Krishnapatnam at about 18.6 million tonnes, Ennore at 10.4 million tonnes, Paradip at 9.3 million tonnes, Haldia at 7.7 million tonnes, New Mangalore at 7.3 million tonnes, Mormugao at 7.3 million tonnes, Dahej at 6.9 million tonnes, Vizag at 6.4 million tonnes and Kandla at 5.2 million tonnes. The balance 14 ports accounted for 29.2 million tonnes

A total of about 2300 number of vessels were unloaded ie about 50 per week at various ports with an average cargo size of 60,000 tonnes per vessel

For receiving a PDF file giving a FREE overview of coal imports in India during 2013, please send a mail to reports@steelguru.com

(www.steelguru.com)

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