Commodity research sample reports by Steel Mint

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Steeling is Basic

SteelMint

IRON ORE INSIGHT 13 November, 2013

Photo Source: www.steel-360.com/FotoMine.php


SteelMint

Steel int

TM

IRON ORE INSIGHT

Steeling is Basic

13 November, 2013

1

Iron Ore Fines Prices raised by Odishabased private miners

Prices as on 13 Nov, 2013

P

rivate and mid-sized merchant miners based in Odisha, India’s largest Iron ore producing state, raised fines prices by INR 200-300/MT in November ‘13, owing to low production. Miners mentioned that production was down by almost 20-25% as cyclone hit the Indian east coast in midOctober.

Particulars

Grade/Size

(INR/MT)

Prices

M-o-M Change

Fe 63/5-18 mm

6,600

200

Fe 65/6-40mm

4,300

0

Fe 63 Fe 63.5/63

2,150 136

400

Fe 63

7,000

100

Steel Grade

23,000

0

80 FeM

19,700

800

Iron ore Lumps Odisha (Rungta Prices, Loaded to wagon, Incld Royalty) NMDC (Basic Prices, Royalty & Taxes extra) Iron ore Fines Domestic (Ex Mines Odisha, Incld Royalty) Export (CFR China in USD/MT)

However, big miners such as Rungta and Essel, which raised offers in the month of October, kept them unchanged for November.

2

Iron Pellet Odisha (Loaded to wagon, Basic Prices) Pig Iron

Some of the merchant miners like Serajuddin and Indrani Patnaik have preferred to hold sales currently and are looking at delivery of previous booking orders.

Cuttack (Basic Prices) Sponge Iron Raipur (Basic Prices)

Current offers for Fe 63 fines are hovering in the range of INR 1,800-2,000/MT (Ex-Mines, Including royalty); was offered at around INR 1,500-1,700/MT (Ex-Mines, Including royalty) couple of months back.

Odisha Miners Iron Ore Fines Offers in November 2013 Fe %

Prices (in INR/MT)

Remarks

Rungta Mines

63

2,450*

-

Essel Mining

63

2,475*

-

KJS Ahluwalia

63

2,150

-

Serajuddin

63

1,860*

Bookings Closed

Indrani Patnaik

63

2,200*

Bookings Closed

KN Ram

62

Bookings Closed

KMC

63

1,900 -

RP Sao

63

-

Mines Closed

Miner

Rungta and Essel mines are offering Fe 63 fines at INR 2,450-2,475/MT (Loaded to wagons, Including royalty).

Bookings Closed

All prices are ex-Mines; including royalty *Prices loaded to Wagons; including royalty Additional cost of INR 400-500/MT from mines to Railway siding

Private Iron Ore Miners in Odisha agree upon e-auction process

I

n a meeting held among high level officials in the last week of October, Odisha government finally convinced most of the leading private Iron ore miners for sales through an e-auction route.

Though, modalities of the e-auction have been finalized, decision about the time of starting e-auction is yet to take place. Miners will have to submit details around the quantity, Fe content and prices of Iron ore they wish to sell, on a fortnightly basis to MSTC. 0.2% of the sale price of Ore will be charged as commission by MSTC.


SteelMint

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IRON ORE INSIGHT

Steeling is Basic

13 November, 2013

2

Indian Iron Ore Exports down 54% M-o-M in October 2013

I

ron ore exports from Paradip Port, the biggest Port in Odisha, dropped by 70% Mo-M in October because of cyclone ‘Phailin’, which hit eastern coast in mid-October and caused huge damages. Daily traffic at Port dropped by 55% and bigger ships were not allowed.

Photo Source: www.steel-360.com/FotoMine.php

It resulted in closure of cargo handling and vessel movement at Port and truck and rail movement to and from Port for few days. Restart of full operations took few days and Port workers in big numbers, were away from work. Vessels at berth and anchorage, in big numbers, were vacated and those yet to come were shown a red signal.

Port Wise Iron Ore Exports from India in Oct

Vizag

262.9

43

Paradip Haldia Dhamra

205.3 140.7 115.3

70 49 45

Total

77.3

36

801.4

54

Qty in '000 MT Provisonal Data

Qty in MnT

October

Gangavaram

Iron Ore Exports from India

M-o-M Change (in %)

Ports

120 100 80 60 40 20 0

100.9

46.8

46.9 18.1

FY 10

FY 11

FY 12

FY 13

8.0 *FY 14

*Till October Source: SteelMint

Source: SteelMint

Indian Iron Ore Output drops 13% Y-o-Y in H1 FY14; Odisha’s Iron Ore dispatches rise

M

ining bans in Goa and only a partial resumption of mining activity in Karnataka resulted in a sharp drop in production of Iron ore.

71 MnT of Iron ore was produced in H1 FY14 (132-133 MnT Iron ore is the expected output in FY14) against 82 MnT of output in H1 FY13 (147 MnT of Ore was produced in FY13). Iron ore dispatches from Odisha went up by 19% to 34.90 MnT in H1 FY14 in comparison to 29.10 MnT in H1 FY13. Indian Iron Ore Production and Exports Financial Year FY 10 FY 11 FY 12 FY 13 FY 14* FY14* Expected Qty in MnT

Production 219 207 167 147 132

Y-o-Y Change (in %) 5.5 19.3 12.0 10.2

Exports 117 98 61 18 13

Y-o-Y Change (in %) 16.2 37.8 70.5 27.8 Source: SteelMint


SteelMint

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IRON ORE INSIGHT

Steeling is Basic

13 November, 2013

3

Indian Iron Ore Lumps Prices remain unaltered for November 2013

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MDC, India’s largest Iron ore miner with 32 MnT pa installed capacity decided to maintain its November Iron ore prices at levels similar to that of October. Although, monsoons impacted the miners Iron ore production and dispatches, but better sales volume in comparison to the total production resulted in stability in prices. In October, NMDC produced 1.9 MnT Iron ore with total sales at 2.26 MnT. In September, the miner had raised offers by INR 100/MT after a year’s time, on account of improved sales in H1 FY14. NMDC’s Iron Ore Output down 9.5% M-o-M in October

NMDC’s Iron Ore Production and Sales

October

1.90

2.26

Q1 FY14

6.92

7.25

September

2.10

2.30

Q2 FY14

5.90

6.48

H1 FY14

12.82

13.73

Qty in MnT Source: SteelMint

Qty in MnT Source: SteelMint

Miners in Odisha, Nations largest Iron ore producing state with about 43% of country’s total output and 35 MnT of merchant capacity, unchanged offers, owing to lower Iron ore output by about 20-25% in October 2013 and slightly improved demand in comparison to previous month. Limited supply of the raw material has resulted in stability of Sponge iron prices as well. In mid-October, Rungta and Essel mines had increased offers by INR 200/MT for rest of the month.

Supreme Court allows e-auction of mined Iron Ore in Goa

upreme Court has finally allowed sales of 11.48 MnT of mined Iron ore in Goa, through an e-auction process; no fresh mining has been permitted.

S

It will form a panel consisting of six members, responsible for the auction process. The member’s names are expected to be announced by midNovember.

The material available for auction is of low grade because of which domestic steel mills might be uninterested to procure the material in big quantities. Rather, it’s assumed that this eauction has given a green signal to encourage exports.

This committee will decide limitations for Goa's Iron ore output and might present the report by mid-February, 2014.

Court is yet to take a decision and give more clarifications on the following: Whether the Ore is available for domestic sales or exports? Who will conduct the E-auction process and on what parameters? If foreign buyers are eligible to participate in e-auction? When will fresh mining be allowed in Goa?

Photo Source: www.steel-360.com/FotoMine.php

Mining in Goa was banned on 10 September, 2012, when Supreme Court’s Ex-justice, M B Shah found the irregularities in mining operations. The total capacity of Goa mines is 36 MnT, out of which 90 per cent of the material used to be exported. But after a ban on mining, Goa’s total production came down to only 18 MnT in FY13.


SteelMint

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IRON ORE INSIGHT

Steeling is Basic

13 November, 2013

4

Indian Iron Pellet Prices hold firm on Export Parity

Iron Pellet prices in Indian domestic market remain firm at INR 7,1007,200/MT (loaded to Wagons at Barbil, Odisha), owing to improvement in realization from exports market Indian Pellet exporters offer Fe 63.5/63 Pellet at around US$ 147-148/MT FOB east coast On 18 October, Jindal Steel & Power Ltd closed a 50,000 MT Pellet (Fe 63.5) export deal at US$ 163/MT CFR China, with a Switzerland based trader; shipment will take place by 15 November Fe 63.5/63 Iron ore fines prices move up to USD 136/MT CFR China Indian Rupee weakens to 63 levels against USD in the beginning of the 2nd week of November

Monthly Average Pellet Prices in Barbil (Odisha) 7,500

7,400

7,000

7,200

7,100

6,700

6,500

6,300

6,400

July

August

6,000 5,500 May

June

Prices (in INR/MT): Loaded to Wagons Source: SteelMint

T

October

Financial Year 2014

hough, lessening imports of Scrap to India, rise in international Scrap offers and limited supply of domestic Iron ore have helped Sponge iron prices to sustain at current levels and demand to remain intact.

Slowdown in construction activities (low finished steel demand) because of upcoming elections, would not help in price rise. Cheaper Scrap in domestic market has pushed Karnataka based buyers to not to pay high for Sponge iron. Since Q4 FY11, Sponge iron prices in H1 FY14 have stood at the lowest level at INR 19,400/MT (ex-works Raipur).

21,000 Basic Prices in INR/MT

Sponge Iron Prices find Support on Weakening Scrap Imports

September

Monthly Average Sponge Iron Prices in Raipur (CG) 20,600

20,500

20,400

20,000 19,500

19,200

19,200

19,000

18,700

19,000

18,500 18,000 17,500 May

Source: SteelMint

Jun

Jul

Aug

Financial Year 2014

Sep

Oct


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IRON ORE INSIGHT

Steeling is Basic

13 November, 2013

5

Average prices of Fe 63.5/63 fines in October, were almost stable at 133/MT CFR China on M-o-M basis

CFR Price in USD/MT

Half Yearly Average Prices for Fe 63.5/63 Iron ore Fines, CFR China 200

184

180 160

148

140

130

134.5

130.5

H1 FY13

H2 FY13

H1 FY14

120 100 H1 FY12

H2 FY12

Source: SteelMint

Indian Iron Ore Prices (in INR/MT) in November 2013 Miners

State

Fe %

5-18 mm

Fe %

Rungta* Essel* Serajuddin*

Odisha

63

6,600

63

Odisha

63

6,575

Odisha

63

Indrani Patnaik*

Odisha

63

KJS Ahluwalia

Odisha

RP Sao

Odisha

10-30 mm

Fe %

Fines

6,070

63

2,450

63

5,825

63

2,475

5,110

-

-

63

1,860

5,200

-

-

63

2,200

63

5,450

61

4,300

63

2,150

-

-

-

-

-

-

All prices are ex-Mines; including royalty | *Prices loaded to Wagons; including royalty

Fe %

ROM

Fe %

Lumps

Fe %

Fines

E-auction

Karnataka

65

3,700

63

3,834

61

3,085

E-auction

Karnataka

54.5

1,750

63.5

3,693

60

2,520

Fe %

Fines

64

2,610

Royalty 10% & Forest Development Tax 12% are applicable; Vat 5.5 % extra

Fe % NMDC

Chattisgarh

65

6-40 mm

Fe %

4,300

64

10-150 mm 3,750

Basic Prices excluding 10% Royalty Source: SteelMint

REPORT BY OUR CONTACT DETAILS Seema Goenka Analyst Email: seema@steelmint.com Mob: +91 9575100530

Alok Singh Thakur Associate-Research

Raipur:

Kolkata:

#301, Jeevan Parisar, Rajeev Nagar Behind Crystal Arcade Raipur (C.G) - 492 007 India

5th Floor, Vishvakarma Building, 86, Topsia Road, South-West Block Kolkata (W.B) - 700 046, India

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