Industry Updates 9th August,2012


INDUSTRY UPDATES
09.08.2012
STEEL, METALS AND MINING
Indian copper futures decline on overseas trend

Indian copper futures prices fell by 0.20% to INR 418.80 per kilogram as traders reduced their positions, taking weak cues from global markets.

At the Multi Commodity Exchange, copper for delivery in November lost 85 paise or 0.20% to INR 418.80 per kilogram with a trading volume of 76 lots. The metal for delivery in August also fell by 75 paise or 0.18% to trade at INR 412.90 per kilogram with a trading volume of 687 lots.

Analysts said that the fall in copper futures prices was due to a weakening trend in overseas markets. Meanwhile, for three month copper dropped as much as 2.2% to USD 7,434 per tonne at the London Metal Exchange.
(Steel Guru)
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COAL
Mormugao port causing Vasco coal dust pollution

Goa's environment minister Alina Saldanha said the Mormugao Port Trust was responsible for the coal dust pollution in the port city of Vasco, 35 km from here.

Ms Saldanha told the state assembly that "MPT has behaved irresponsibly and not adhered to conditions by the GSPCB (Goa State Pollution Control Board) and High Court and has repeatedly not fulfilled the directions issued.”

She said that black soot rising from handling of coal at the port's hoarding berth was layering the town.

She said that "I will visit the site along with a team after the monsoon and examine the issue thoroughly adding that air pollution monitoring stations set up by the GSPCB in the town were showing high levels of dust and particulate matter.”

Ms Saldanha said that "As a short term measure, the GSPCB shall ensure maintaining of the coal stack height, water sprinkling of the coal, till such time a closed shed is built at berth 11, referring to MPT's promise to build a closed shed for handling coal.”

The issue of coal dust pollution has long been an issue. Several residents have even approached the High Court seeking relief.
(Steel Guru)

NTPC to drive surge in coal imports into India

Thermal coal imports into India are projected to climb to 80 million tonnes to 85 million tonnes this in 2012-13, a jump of 60% over the 50 million tonnes in 2011-12 as power producers, chiefly NTPC, seek to overcome domestic supply woes.

NTPC, the largest power generation utility, is set to account for a fifth of the total projected steam coal import for 2012-13. The Maharatna company plans to import 16 million tonnes, which is 33% higher than the 12 million tonnes imported in 2011-12.

As per report, NTPC has already placed orders for 4 million tonnes and a couple of tenders are in the pipeline

Mr Ganesan Natarajan president & CEO of Ennore Coke told BS that “The deficit in thermal coal is widening as indigenous supplies are uncertain. CIL is tweaking FSA rules and no power company in the country is having adequate coal inventory. In this situation, steam coal imports are only going to spike. In my opinion, steam or thermal coal imports by India will be in the range of 80 million tonne to 85 million tonne in 2012-13 compared to 48 million tonne to 50 million tonne in the year ago fiscal.”
(Steel Guru)
CIL agrees to 40 per cent penalty for shortfall in supply to power companies
 State miner Coal India agreed on Tuesday to pay penalties for failing to provide sufficient supplies to new Indian power projects that range from 1.5 to 40 percent of a shortfall, depending on the level of default.

It also agreed to pool the prices of imported coal with domestic supplies but said a final decision on this issue would be taken by the Central Electricity Authority. Such a pricing system would work only if all domestic consumers are willing to accept the resulting higher price, the company said.

"We have no objection to pooling of prices if it is acceptable to all stakeholders," Coal India Chairman S Narsing Rao told reporters after a board meeting.

The move to fix penalties follows the company's agreement last week to supply a minimum of 80 percent of the coal needed for new power projects, bowing to a condition set by the government, and paves the way for it to sign a fuel supply pact for 48 projects.

Coal India had stipulated that it may use a mix of up to 15 percent imported coal versus 65 percent domestic.



Coal India, the world's largest coal miner, produces nearly 80 percent of the country's domestic coal supply of about 550 million tonnes but has struggled to increase local supplies for years because of failure to get swift environmental and regulatory approval and inadequate railway infrastructure.

The miner had earlier sought to pay only 0.01 percent of the shortfall in supply, while utilities asked for 10 to 20 percent.

PENALTIES SPECIFIED

On Tuesday, the Coal India board agreed to pay a 1.5 percent penalty if its supplies amount to 65 to 80 percent of the contracted volume and 5 percent if they reach 60 to 65 percent, its chairman told reporters after the board meeting.Penalties would rise to 10 percent for 55 to 60 percent, 20 percent for 50 to 55 percent and a maximum of 40 percent for supplies of less than 50 percent of contracted volumes.

"It's not very ominous. Obviously, it's more than they initially wanted, but we should also factor in that they are allowed to import coal to make up shortfall," said Murtuza Arsiwalla, a sector analyst with Kotak Securities. The miner typically puts a 10 percent penalty clause in its fuel supply pacts with customers.

It prices domestic coal 45 to 70 percent below international prices, in part to keep costs low for power companies. Pooling prices would allow the cost of more expensive imports to be distributed to more customers. Coal India plans to import 20 million tonnes in the current fiscal year ending March 2013 and 30 million tonnes in 2013/14, Rao said.

Initial imports will be done through state agencies State Trading Corp and MMTC, he said. Ahead of the announcement, shares in Coal India, the country's fourth-largest company by market value at $39 billion, closed 0.3 percent higher in a firm Mumbai market
(Economic Times)
Coal Ministry cuts output target for captive mines by Half
The coal ministry has halved the production targets of captive coal mines owned by the private as well as public sector companies, a decision that is likely to exacerbate the shortage of the fuel supply in the country.
The Results Framework Document prepared by the coal ministry has set the production target for private sector captive coal mines in the current fiscal at 23.7 million tonne (mt), down from 49 mt they produced in 2011-12, while the target for public sector captive mines has been lowered to 15.8 mt from 37.11 mt.
The move comes at a time when the country's largest coal producer Coal India Limited (CIL) has expressed its inability to supply more than 65% of the contracted coal to power producers.
Coal ministry officials could not be reached for a comment. But a senior executive in the coal industry said the captive coal producers were facing the same problems as CIL. "Land acquisition issues and delays in environment and forest clearances have also been acting as deterrents for the captive mine owners, both in the private and the public sector," the executive said on condition of anonymity.
In contrast, CIL's production target for 2012-13 has been raised to 468 mt, compared with 435.84 mt of production in 2011-12. The miner was earlier given a target of 447 mt for 2011-12, but it could not achieve it because of the introduction of a new set of pollution norms, which affected production at a number of its large mines. The coal ministry had allotted some 200-odd blocks for captive consumption in the past few years, of which only 26 mines have been developed so far.
(Economic Times)
South African Coal export prices increase to highest in a Month

Coal export prices at South Africa Richards Bay, the continent biggest terminal for shipping the fuel, increased the most in a month.

According to IHS McCloskey data on Bloomberg coal for immediate delivery rose USD 2.90 or 3.4% to USD 88.52 per ton in the week ended August 3 that’s the highest level since July 6, 2012. The price is quoted on a free-on-board basis, which excludes delivery costs.
(Steel Guru)
IRON ORE
Goa likely to cap iron ore exports at 45 million, dumps
Goa government's draft mining policy recommends capping the iron ore exports at 45 metric million ton a year. It also recommends dump exports to be capped at 25 Million tons maximum in any season, which is included in total capping of 45 million tons maximum annually.
Since, environmental degradation across the coastal state due to excessive mining has led to public outcry in the recent years, The State Government through the Department of Mines and Geology shall constitute an expert panel for determining the optimum level of fresh mining that can be undertaken in Goa. Pending this study by the expert panel , no fresh public hearings shall take place for Environmental Clearance of mining projects .
Chief Minister Manohar Parrikar today tabled the draft policy before the Legislative Assembly. Suggestions can be submitted till September 10, after which it will be finalized.
There is a good news for some of the dumps which haven’t been declared as of date. For those dumps which have not been declared as on date the concessionaire / Lessee shall declare the stocks within 180 days of this policy. The Director shall inspect the stocks and add it to the list for allocation for the next shipping season.
Another important provision is that the policy allows export of ore from dumps. The management of dumps has become a risk for mining companies as well as regulators. In the year 2011, at least 3 incidents were reported with loss of lives on account of excessive dumps sliding. While investigations are still on to determine the precise cause of these deaths, inaction in dumps management, is very risky as these can prove to be threat to life. Further dumps have been contributing to silting of water channels, reducing depth of river as also increase in metal content of the water, posing health hazard to the population of the state. The prices of low-grade iron ore in these dumps are very volatile, it says, adding that "current market situation may not last for long", and hence this ore should be sold off.
The policy also mentions that Goa will impose a general limit of 45 million tons on the ore that can be transported along the public roads in a year, subject to more specific limits based on the condition of the roads in each area. This limit will be reviewed periodically as and when dedicated mining transport corridor is made available, or when carrying capacity of the road is enhanced.
(Ore Team)
Goa's iron ore export to European countries declined to 3.8 lakh tons in 2011-12, which is four times less than 16.20 lakh tons exported in 2007-08, the Rajya Sabha was told on Wednesday.
However, moneywise there was no loss in terms of the price as the exports in 2011-12 yielded Rs 233.29 crore as against Rs 234.62 crore in 2007-08, and much better than the previous year of 2010-11 when the State earned Rs 211.11 crore in exporting 6.7 lakh tonnes.
Minister of State for Commerce and Industry Jyotiraditya Scindia disclosed this in a written reply to Congress MP Shantaram Naik in the Rajya Sabha.
While exports to Europe from Goa declined in the last fiscal, India's exports to these countries rather grew by 15.7 per cent in 2011-12 as compared to 2010-11. The iron ore exports from Goa is just 1 per cent and less of the total iron ore exports from the country, the minister added.
As per OreTeam’s figures, 1.92 million tons of iron ore landed in Europe in 2006-07, which then decreased to 16.20 lakh tons in 2007-08 and further decreased to mere 577,827 tons in 2009-10. The main countries importing Goan iron ore in Europe are Rumania and Netherlands which intake nearly 85% of the imported ore.
Other than China and Europe, majority of Goan shipments also reach countries like South Korea, Pakistan, UAE, Qatar, Kuwait, Dubai, Kenya, Oman and Saudi Arabia. South Korea remains the biggest customer in this category.
(Ore Team)
CEMENT
Iran cement and clinker exports up by 30pct

Iran exported over 4.64 million tonnes of cement and clinker in the first 4 months of the current calendar year which began on March 20, showing 30% growth compared to the same period last year. Some 1.13 million tonnes of cement and 163,232 tonnes of clinker were exported in the fourth month, ended on July 21st 2012.

Mr Mohammad Fatemian an official with the Industry, Mine and Trade Ministry said that Iraq, Central Asia, UAE and Afghanistan were the main targets for the Iranian made products. Iran’s cement production capacity will be increased by 6.8 million tonnes to reach 82 million tonnes by the end of the current calendar year.

Mr Mohammad Fatemian said that “The country’s cement production capacity stood at 76.4 million tons in the past calendar year, which ended on March 19th 2012. Over 10.4 million tonnes of cement was exported last year. The figure is projected to rise to 15 million tonnes this year.

Mr Mehdi Ghazanfari Industry, Mine and Trade minister of Iran has announced that the country's current cement production capacity stands at 74 million tonnes. The figure will reach 110 million tonnes by 2015
(Steel Guru)
AGRICULTURE
FERTILISERS
ENERGY 
India instructs private firm Gesco to ship Iranian oil

India’s shipping ministry has told private company Great Eastern Shipping Company to supply tankers to import Iranian oil for state run refiner MRPL, which had to slash imports from Iran in July because the shipper was unwilling to carry them. Mangalore Refinery and Petrochemicals, Iran’s biggest Indian client, has an annual contract with Gesco through Transchart an agency of the federal shipping ministry.

But Gesco refused last month to lift cargoes for MRPL because of the lack of insurance cover after European sanctions came into effect barring insurance and reinsurance for Iranian shipments.

An industry official with access to a letter sent by the shipping ministry to Gesco said that it made clear India had now allowed state-run insurers to provide some cover for Iranian shipments and told the company to provide vessels for MRPL. Finance ministry has notified insurance policy for Iran oil imports on July 30th 2012.

The industry official said that Gesco are requested to arrange for the necessary insurance cover immediately and nominate suitable vessels to MRPL and Transchart for loading Iran crude oil under the CoA.

Gesco, the country’s biggest private shipper said that it has not yet received the letter and had told MRPL that insurance in its current form was inadequate for voyages to Iran.

Ms Anjali Kumar spokeswoman of Gesco said that “We have conveyed to MRPL that we will not be able to lift cargoes from the sanctions-hit country due to inadequacy of the insurance cover offered by the Indian insurer United India Insurance Company.”

Indian insurers have agreed to provide cover of USD 50 million each against pollution and personal injury claims also known as protection and indemnity insurance and for hull and machinery to protect ships against physical damage.

India is permitting refiners on a case by case basis to use Iranian tankers and insurance for oil purchases. Iran which was India’s second biggest oil supplier for 5 years slipped to third place in 2011 and 2012 as sanctions bit.
(Steel Guru)
SHIPPING, TRADE AND TRANSPORT
Krishnapatnam port sets record in coal discharge

Krishnapatnam port in Andhra Pradesh set a new record in the Indian ports sector by discharging 0.122 million tonnes of coal in 24 hours using the conventional unloading system.

The Krishnapatnam Port Container Terminal, the container business arm of the port, is gearing up to handle new scheduled calls beginning this month. The terminal last month added four gantry cranes of Keppel Fels and new mini-bagging machines, installed new hopper and conveyor systems in warehouses and built new sidings to handle the bulk cargo at the port.

The Krishnapatnam port developed and operated by the USD 5 billion Navayuga Group is executing INR 4,000 crore phase-II development program. The port which has five multi purpose berths with a draft of about 15 million tonnes handles a little over 16 million tonnes as against the phase-I installed capacity of 25 million tonnes.
(Steel Guru)

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