INDUSTRY UPDATES - 23/05/2013

JSW Steel's production down 11% at 6.37 LT in April

JSW Steel's crude steel production fell 11 per cent to 6.37 lakh tonnes (LT) in April largely due to planned shutdown of units and lack of availability of quality iron ore.

The company, headed by Sajjan Jindal, had produced 7.15 LT of crude steel in April, 2012.

Its production of flat steel was down 13 per cent at 4.55 LT, while the long steel production declined by 17 per cent at 1.28 LT, JSW said in a statement.

Flat steel is largely used by automobile and consumer durables sectors, while long steel is used in the construction and infrastructure sectors.

"One of the blast furnaces at Vijayanagar works (in Karnataka) was under annual shutdown for 22 days and resumed operations on April 26, 2013 and therefore, the capacity utilisation was lower -- at 73 per cent Vijayanagar works," the company said.

Similarly one of its blast furnaces at Salem, Tamil Nadu was also under shutdown during April, 2013, leading to lower production of crude steel. The blast furnace at Salem resumed production on May 6, 2013, the company said.

"The availability of quality iron ore in sufficient quantities remained a challenge, impacting the production and capacity utilisation," it added.

The company had produced 8.51 million tonnes of crude steel in the last fiscal despite continuation of the iron ore crisis in Karnataka. Tomorrow it will be announcing its fourth quarter and annual financial results.

Shares of the company were being traded at Rs 686.95 apiece on the BSE during late afternoon trade, down 0.74 per cent from the previous .

Goa shipping industry plans to transport long-distance cargo

Hit by the ban on mining activities, Goa shipping industry is exploring a new avenue of carrying long-distance cargo from inland waterways to ports in the neighbouring States, passing through the Arabian Sea.
“Since there is an uncertainty over mining in Goa, we are exploring the possibility of using our ships for other kind of long-distance cargo,” Atul Jadhav, President of All Goa Barge Owners’ Association (AGBOA), said.
Around 300-odd barges carrying iron ore from different jetties to the Mormugao Port and Panaji Port have been rendered jobless, due to the Supreme Court ban on iron ore exports from Goa.
“The Indian National Centre for Ocean Information Services (INCOIS) has already conducted a study on Goa’s 105-km-long coastline and declared its water as partially smooth, which will give a right to the ships from the State to travel up to 12 nautical miles in the sea,” Jadhav added.
Ships in Goa, which are currently registered under the Inland Vessels Act, 1970, will have to be registered under the Merchant Vessels Act, 1958, to enable them to travel mid-sea.
INCOIS has already submitted its report to Goa’s Captain of Ports, who will have to forward it to the Union Ministry of Shipping.
Jadhav said that the barges would later be termed as “coastal vessels” and can carry cargo of different industries from Goa’s inland waterways to the ports in Mumbai or even up to Gujarat.
“Maharashtra and Gujarat governments have already got a study conducted by INCOIS, which has certified their waters as partially smooth,” he said.
Ship owners in Goa are also looking at the forthcoming industrial investment policy of Goa which will allow construction of jetties along the inland waterways.

Ahead of integration, Mittals reducing stake in JSW Ispat

Ahead of its full integration with the JSW group, one of the promoter entities of JSW Ispat Steel Ltd (formerly Ispat Industries, and now majority
controlled JSW Steel), Ispat Steel Holdings, has been reducing its stake progressively.
Ispat Steel Holdings, an investment arm of Mittals and incorporated in Mauritius, had the single largest stake in Ispat Industries.
According to the disclosures to the stock exchanges, the Mauritius entity offloaded over 2.75 crore JSW Ispat Steel shares in the market in April through separate transactions. Till March 31, the entity held 10.85 crore shares or 4.31 per cent stake. At the end of October-December of 2012, the Mauritius outfit had 7.36 per cent.
Ispat Steel Holdings reduced to 3.22 per cent from 4.31 per cent in April.
Largely because of this off-loadings, the total promoter holding of both the Sajjan Jindal group and the Mittals, had came down by 5.24 per cent to 58.65 per cent after March 31.
The Bombay High Court has sanctioned the composite scheme of Amalgamation and Arrangement among JSW Ispat Steel Ltd and JSW Building Systems Ltd and JSW Steel Coated Products Ltd and JSW Steel Ltd and their respective shareholders and creditors on May 3.
Suzlon in talks to repay investors after dollar bond default

Suzlon Energy Ltd, the world’s fifth-biggest wind-turbine maker, is in talks to repay investors after defaulting on $209 million of US dollar-denominated convertible bonds in October, according to two people familiar with the matter.

The company, the subject of India’s biggest convertible debt default, may issue notes denominated in the US currency to fund the 2012 repayment, the people said, asking not to be identified because the details are private.

Pune-based Suzlon declined to comment on Monday in an e-mailed response to questions, saying it’s in a silent period ahead of a quarterly earnings report due 30 May. Suzlon Energy failed to redeem $175.8 million of zero- coupon notes and $32.8 million of 7.5% bonds which fell due 11 October, according to data compiled by Bloomberg. Its stock on Monday closed at Rs.14.34 down 0.90% on the BSE.

India’s top wind-turbine maker ceded that position in the financial year ended 31 March for the first time in at least a decade, according to data from the Indian Wind Turbine Manufacturers’ Association. Suzlon completed a Rs.9,500 crore ($1.7 billion) debt restructuring last month, which included issuing shares to its lenders.

Iran government moves to impose steep export duty on iron ore

Reuters reported that Iran’s government is negotiating a tax of up to 40% on iron ore exports to take advantage of a surge in sales to China, aiming to replace revenue from oil and other sources eroded by sanctions.

Iran’s iron ore exports to top steel producer China jumped 48% in the first quarter from a year ago to a level that would generate annual revenue of about USD 3 billion at current prices.

The government is now talking with local miners about an export tax, trading and industry sources said. A trader in Shanghai, who imports Iranian iron ore said that “A few iron ore cargoes were earlier banned from leaving the port as the government is looking to impose a 40% export duty based on free on board prices.”

The negotiations may lead to agreement on a smaller number than 40% to enable miners to absorb the extra costs and continue selling, given fears that the tax could otherwise end up cutting Iran’s exports.

A spokesman for the Iran Iron Ore association said that “They are putting the tax in place because the government wants to get a share of the profit. 40% is outrageous but I think eventually they will come down to a more reasonable number.”
JSW Steel April crude steel output down by 11%

JSW Steel Limited has recorded 11% decline in crude steel production at 637,000 tonnes during April 2013 as against 715,000 tonnes produced in the corresponding period last year.

The production of rolled products (flat) has declined 13% to 455,000 tonnes compared to 525,000 tonnes in April last year. The company has produced 128,000 tonnes of rolled products (long) during the month of April, which is a decline of 17% over the same month last year. It had produced 155,000 tonnes in April 2012.

The company said in a statement that "The availability of quality iron ore in sufficient quantities remained a challenge, impacting the production and capacity utilization. One of the blast furnaces at Vijayanagar works was under annual shutdown for 22 days and resumed operations on April 26, 2013 and therefore the capacity utilization was lower at about 73%.”

The statement added that similarly, one of the blast furnaces at Salem unit was also under shutdown during April 2013, which resumed production on May 6, 2013. Consequently, the production was lower during April 2013.

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