INDUSTRY UPDATES ON 10.10.2013

Rashtriya Ispat Nigam clocks 34 per cent revenue growth in September




Buoyed by a whopping 63 per cent volume growth, Rashtriya Ispat Nigam's sales revenue rose by 34 per cent to Rs 1,222 crore in September.



RINL, the Vizag-based PSU steel maker, had clocked Rs 913 crore sales revenue in the same month last year, a source in the company said.



The sales volume of the company rose to 2.73 lakh tonnes (LT) from 1.68 LT in September, 2012.



Sales of valued-added steel, which fetches better price, stood at 1.77 LT compared to 1.37 LT a year earlier.



Production of saleable steel increased by 23 per cent to 2.46 LT against two LT a year ago. It produced 3.22 LT of hot metal during the month.



For the April-September period of current fiscal, sales of the company stood at 12.9 LT compared to 11 LT during the same period last fiscal.



RINL produced 14.6 LT saleable steel during the six-month period, a growth of 11 per cent. Hot metal production, however, grew by just three per cent to 19.3 LT.



Sales revenue of the company during the April-September period rose marginally to Rs 5,798 crore over the same period last fiscal.

Ample supply holds sugar steady



Sugar prices ruled unchanged on Wednesday with routine activities in absence of any supportive cues. On the Vashi market, spot prices declined by Rs 2-5 at higher end. Naka and mill tender rates ruled steady.

As supply is ample morale was calm, said sources. Market carries more than sufficient stocks.

Sources said that since producers are desperate to sell old stocks with the start of new crushing season and in the absence of neighbouring States’ buying or export demand liquidity of the commodity remain ample in local markets.

Indian sugar mills are carrying more than 80-85 lakh tonnes of sugar and hopes of higher output in 2013-14 pressurises the market sentiment.

In domestic market, activities remained routine despite higher festival demand due to ample and continuous supply.

Arrivals at Vashi market were 62-63 truck loads (of 100 bags each) while local dispatches were 61-62 truck loads.

On Tuesday, 13-14 mills sold about 24,000-25,000 bags at Rs 2,750-2,850 (Rs 2,750-2,850) for S-grade and Rs 2,900-3,000 (Rs 2,930-3,000) for M-grade.

On the National Commodities and Derivatives Exchange, sugar November futures was down by Rs 8 to Rs 2,, December was Rs 2,901 (Rs 2,901) and January declined by Rs 8 to Rs 2,900 till noon.

Coal banking report to be submitted by month-end



The report on coal banking policy would be submitted by the end of this month, said B.K. Chaturvedi, Member of Planning Commission, who is heading the panel.

However, public sector miner Coal India Ltd has expressed reservations over the scheme where it receives coal from private miners and commits itself to returning it to them in the future.

“They (Coal India) are a member of the group, when we submit the report we will finalise it together with them, we will submit the report by the end of this month,” Chaturvedi said on the sidelines of India International Clean Tech Summit organised by FICCI.

But, Coal India’s reluctance may create a hurdle in the implementation of the coal banking scheme.

The Association of Power Producers (APP), which represents 20 private power producers in the country, had suggested that Coal India should be the custodian of surplus coal. They estimate that nearly 25 million tonnes of extra coal would be produced by 2015-16.

Earlier, Coal India said it was ready to market the extra coal. However, it said it could not commit to returning the same volume of coal to the respective companies later.

Delay in withdrawal of monsoon hits soyabean harvest in M.P.



It has been a disturbed beginning for soyabean harvest this year, mainly in Madhya Pradesh. The delay in withdrawal of monsoon is impacting the harvest process resulting in poor quality beans.

Also, market arrivals have been hit resulting in a sluggish start to the crushing season. This has made the exporters of soya meal, who have contracted for an estimated one million tonnes till December, jittery.

“The extended rains have hit the harvest mainly in Madhya Pradesh and parts of Rajasthan.

The arrivals in M.P. markets have been around 1.5 lakh bags (15,000 tonnes) on Wednesday, much lower than the 9 lakh-10 lakh bags at this point in time,” said Rajesh Agarwal, spokesperson for the Soyabean Processors Association (SOPA). Also, the high moisture content in beans has affected processing, with only 50 per cent of the 140 units starting crushing operations, Agarwal added.

The beans that are arriving in the market have 17-20 per cent moisture content, while the ideal level for crushing is around 10-12 per cent.

Under normal conditions, the monsoon should have begun withdrawing from parts of M.P. at this time.

“However, it has been raining on and off and we hope that it will not last long,” Agarwal added.

The situation is not that bad in Maharashtra, where the arrivals are estimated at two lakh bags.

According to the India Meteorological Department, East Madhya Pradesh received 386 per cent excess rains during October 1-8 period over normal precipitation for the period. In West M.P., the rains were excess by 94 per cent, East Rajasthan (55 per cent), West Rajasthan (73 per cent), Vidarbha (241 per cent), Saurashtra 189 per cent and Gujarat 140 per cent for the period.

An official at a New Delhi-based export house said the rains impacting harvest had made merchant exporters, who aggregate soya meal from crushing units and sell them to overseas buyers, a bit nervous. These exporters are likely to find it difficult to execute their commitments.

In its first crop estimate, SOPA has pegged output in M.P. at 59.47 lakh tonnes, a decline of 7 per cent over last year’s 66.85 lakh tonnes. It said the crop had suffered in districts such as Harda, Hoshangabad, Betul, Raisen, Vidisha, Sagar, Damoh, Bhopal and Bundelkhand on account of excess rains.

In fact, SOPA has pegged the total crop this year at 129.83 lakh tonnes, about 17 per cent lower than the Agriculture Ministry’s early estimates of 156.81 lakh tonnes on crop damage and lower yields in M.P.

Steel market remains in stalemate after National Holiday in China

Day 2 after the National holiday in China price levels remain unchanged deepening the ambiguity over the direction. September price levels are remained depressed after a brief rally in July. Mills had regained production momentum last month after some correction in August.



In Sep, China’s steel sector Purchasing Managers’ Index (PMI) fell 4.2 points month on month to 49.2, swinging back into contraction after a rise for two months in a row.



The sub-index for production inched up 1.1 points from Aug to 53, showing mills’ enthusiasm about expanding production. New order sub-index plunged 8.7 points to 49.2 and new export order sub-gauge dropped 7.8 points to 44.9, piling up steelmakers’ pressure of promoting orders.

Indian Long steel product market explodes post Pitra Paksha but will it sustain

In its first tryst with destiny long product market exploded with resounding rally all over the country. Heralding onset of demand pick up it was more based on hype of anticipated increased construction activity.



Even the long TMT prices saw scattered rally backed by emphatic rally in pencil ingot price. Typically pencil ingot market is more susceptible to speculative winds compared to finished steel. The reason being furnace owners have the elbow room to pass on the increment to re-rollers. Re-rollers are deprived off advantage being interface with buyers. If the furnace owners can maneuver the re-rollers have to taste the bitter truth of market demand which is largely based on endues consumption.



Slight peep into the past reveals an astonishing truth of furnace owners remaining firm on high pencil ingot levels despite abject finished demand. It was the re-rollers who have taken double flak. This explains for the relatively muted reaction in TMT and WRC price levels.

Steel rebar futures at Shanghai under pressure on GDP forecast cut

Steel reinforcement-bar futures traded near the lowest level in three months after the International Monetary Fund cut its forecast for China’s economic growth, damping demand for the building material.



Rebar for delivery in January on the Shanghai Futures Exchange fell as much as 0.5 percent to CNY 3,580 per tonne and traded at CNY 3,585 at 10:14 AM local time.



Futures have fallen to CNY 3,541, the lowest for a most-active contract since July 2.



IMF said that “China’s growth will be 7.6% this year and 7.3% next year as compared with July predictions of 7.8% and 7.7%.”

Morgan Stanley raises iron outlook as deficit persists into 2014

Morgan Stanley increased its iron ore forecasts for the Q1 and Q2 of next year as global demand recovers and the seaborne market remains in deficit well into 2014.



Analysts Mr Peter Richardson and Mr Joel Crane said that “The steelmaking ingredient will average USD 130 per tonne in the first three months, USD 5 more than previously forecast and USD 120 in the Q2 up from USD 117. Ore will average USD 120 in 2014, an increase of 3%.



Iron ore entered a bull market in July as users in China replenished stockpiles that shrank in March to the lowest level since 2009. Australia’s Bureau of Resources and Energy Economics said last week that prices will average USD 119 in 2014 from USD 112 forecast in June as surging Chinese consumption absorbs gains in output that are seen pushing the global market into surplus. Morgan Stanley reiterated that its view was above consensus.



They said that “Although we believe market concerns over price into 2014 are warranted, they are overly pessimistic. Outside of China, steel output growth will see its best year since 2011, led by modest rebounds in production in India, East Asia and North America.”



The seaborne market will extend three years of deficit into the H1 of 2014, before shifting to surplus. The deficit is forecast to narrow from 71 million tonnes this half to 25 million tonnes between January and June next year and then swing to a surplus of 49 million tonnes in the H2 of 2014.

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