Date: 02 March 2013 BUDGET 2013 Highlights
Budget did not bring any surprises !! The announcement of Union Budget 2013-14 did not bring any surprises for the ferro alloys industry. The announcements made during the budget were not in sync with the pre-budget expectations. However, there was one good thing for buyers of bituminous coal. The imposition of 2% customs duty and 2% CVD will be a relief for them as they were previously paying higher duties on the same.
Budget Proposal
Budget Outcome
Impact
Comments
Reduce custom duty No change in custom on raw material-mn duty on raw material ore & cr ore to nil
Domestic Ferro alloys producers will continue to pay more for raw material imports
levy of 2% customs Waiving off customs & 2% CVD on import duty on steamed and anthracite coal bituminous coal imports
Beneficial for buyers of bituminous coal as they were earlier paying 5% customs duty & 6% CVD
Listing of FeMn Slag No listing of FeMn under as free slag as free instead of restricted
Shot-supply of FeMn slag will continue
Ferro Alloys market remains unchanged post Budget Market for ferro alloys remained unchanged post budget. Prices had moved up sharply in the month of Feb due to hike in raw material prices & its short– supply. Raw material prices in international market also moved up especially for manganese ore.
Experts comment on the Budget!!
Contact Details
“Nothing substantial was announced in the budget for ferro alloys. None of the recommendations were considered. Ferro alloys producers will continue to be dependent on expensive import of raw material”
Monica Patnaik Analyst monica.patnaik@steelmint.com
+91 771-2282777 “India is a mineral rich country but we are not utilizing our resources properly. Though a lot of announcements have been made for infrastructure development but only time can say if these announcements will remain on papers or will actually be implemented.”
Date: 02 March 2013 Raw Material Prices Manganese Ore Grade Unit India (MOIL) 37.5 % Lumps Basic (Rs/mt) India (MOIL) 44% Lumps Basic (Rs/mt) Aus(BHP) 46% Lumps CIF China ($/dmtu) South Africa 38% Lumps FOB ($/dmtu) Brazil 44% Lumps FOB ($/dmtu) Chrome Ore India (OMC) E-auction India (OMC) E-auction India (OMC) E-auction South Africa Turkey
Raw material Scenario
1-Mar 8,825 11,513 5.9 5.4-5.5 5.3-5.4
23-Jan 8,825 11,513 5.65 5.15 5.00-5.22
1-Mar
31-Jan
17,073
11,087
17,279
10,508
Conc 46-48% Ex-mines (Rs/mt)
11,090
9,340
Lumpy 36-38% CFR China ($/mt) Conc 46-48% CFR China ($/mt)
185-195 290-300
165-170 285-290
1-Mar 18,000 18,000
8-Jan 19,000 19,000
Grade Unit Friable 54% & Ex-mines (Rs/mt) above Friable 52Ex-mines (Rs/mt) 54%
LAM Coke Grade Guwahati 80% FC min Cuttack (NINL) 85% FC min
Unit Basic (Rs/mt) Basic (Rs/mt)
Domestic Market
•
Manganese ore- MOIL is expected to increase prices by 5-7% in the next quarter
•
Chrome ore– OMC fetched record price for Chrome ore in the recently concluded e-auction. The price rise was attributed to local short supply due to production cease by other merchant chrome miners and rise of ferrochrome prices in the international market. JSL and Rohit Ferrotech were the aggressive bidders in the Feb eauctions
•
LAM Coke– NINL cut LAM Coke price by Rs 1000/MT for March. NINL's LAM Coke comes in mean size of 50 mm (20-80 mm) with ash content of 12.5%, VM of 1%, Sulphur of 0.6%, CRI of 22% (Min) and CSR of 63.5% (min).
Domestic Market remained firm in Feb
Indian Ferro Alloys Prices
Silico manganese/ Ferro Manganese
Silico Manganese Place Grade Raipur 60-14
1-Mar 53,000
14-Feb 1-Feb 53,200-53,500 54,000
Ferro Manganese Place Grade Raipur HC 75% Raipur HC 70% Raipur HC 65%
1-Mar 58,000 54,500-55000 53,000-53,500
14-Feb 59,500-60,000 55,000 53,000
Ferro Chrome Place Grade Odisha HC 60%
1-Mar 74000-75000
14-Feb 1-Feb 72,000-73,000 69,000-70,000
1-Feb 57,000 52,500 50,500
Ferro Silicon Place Grade 1-Mar 14-Feb 1-Feb Bhutan HC 70-75% 67,000-68,000 67,000-68,000 67,000-68,000 Basic Prices: INR/MT, ED & Taxes extra
Market for manganese alloys had picked up by the mid of Feb due to hike in prices of imported manganese ore but prices cooled down a bit later by the end of the month due to lack of good buying interest. MOIL’s e-auction of HC FeMn 78% (+/- 1%) was settled at Rs 51,813/MT Ex-Balaghat i.e. not much higher than the previous e-auctions Rs 51,600- 51,700/MT. Moreover, the prices were said to be much lower than the market rate. Ferro Chrome Ferro chrome prices witnessed a bull run in Feb due to short supply of ferro chrome in the market. Sharp hike in OMC’s chrome ore prices will also factor in the market very soon & prices are expected to stay high in March.
Date: 02 March 2013 International Market International Ferro Alloys Prices Silico Manganese Place Specification Grade 1-Mar China FOB China (USD/MT) 65-17 1380-1400 Europe Ex Europe (EUR/MT) 65-17 870-920 India FOB Vizag/ Haldia(USD/MT) 65-15 1075-1080 US Ex US (USD/lb) 65-17 0.51-0.54 Ukraine Ex Ukraine, incl. VAT (USD/MT) 65-17 1415-1535
14-Feb 1380-1400 870-920 1095-1110 0.51-0.54 1415-1535
1-Feb 1380-1400 860-910 1080-1100 0.51-0.54 1500-1620
Ferro Manganese Place Specification China FOB China (USD/MT) Europe Ex Europe (EUR/MT) India FOB Vizag/ Haldia(USD/MT) Ukraine Ex Ukraine, incl. VAT (USD/MT)
Grade 1-Mar HC 75% 1340-1360 HC 70-75% 850-900 HC 75% 1020 78% min 1350-1475
14-Feb 1340-1360 850-900 1010-1020 1350-1475
1-Feb 1340-1360 840-890 1000-1020 1543-1617
Ferro Chrome Place Specification China Ex China (RMB/MT) US Ex US (USD/lb) Japan CIF Japan (USD/lb)
Grade HC 50% HC 50% HC 60%
1-Mar 7350-7500 1.00-1.03 0.97-1.00
14-Feb 7550-7750 1.00-1.03 0.95-0.97
1-Feb 7550-7750 0.95-0.98 0.95-0.97
Ferro Silicon Place Specification China FOB China (USD/MT) Europe Ex Europe (EUR/MT) US USD/lb Ukraine Ex Ukraine, incl. VAT (USD/MT)
Grade 75% min 75% min 75% min 65% min
1-Mar 1380-1400 1110-1150 0.94-0.96 1560-1670
14-Feb 1380-1400 1110-1150 0.93-05 _
1-Feb 1340-1360 1050-1090 0.87-0.89 _
Ferro Chrome price comparison of India & China
India FeCr Prices (Rs/mt)
China Bao Steel FeCr Prices (RMB/mt)
78000 76000 74000
8000
Hike in domestic market was sharper than international market
7800
7100 65888
7000
63548 64000
7400 7200
7000 64500
7800 7600
7500
7250
68000 66000
75000
7400
72000 70000
76000
6800
62500
62000
6600 Oct'12
Nov'12
Dec'12
Jan'13
Feb'13
Mar'13
Japan– Spot price of high carbon ferrochrome imported into Japan moved up slightly in Feb as Japanese are keen to buy before the next quarter settlement of benchmark price for FeCr. Japanese buyers foresee a 10cents hike in the benchmark price for April-June. Europe– There was no fundamental change in the market sentiments. Reduced supplies continued to hold prices firm. South Africa– South African ferrochrome producers are trying to secure themselves with material as they foresee an extension of the power buyback agreements with state power group Eskom. ChinaChina’s January import of manganese ore reached its highest level since 2009. It imported 1,359,868 tonnes of manganese ore and concentrate in Jan’13, i.e. up by 18.7% M-OM & 98.9% rise Y-O-Y, according to Chinese customs data. The hike in imports was attributed to the bullish market expectation for alloy prices post New year holidays. Whereas, on the other hand China’s Baosteel has cut its purchase price for ferrochrome by 300 RMB/mt to 7,500 RMB/mt in cash, signaling that the price hike in Feb was just due to the rush to stock before holidays. The adjacent graph shows the price comparison of Indian FeCr prices with China’s FeCr prices. It shows that Indian prices move in sync with Chinese prices. However, in Feb, the price hike in India was sharper than the Chinese market due to short supply of ferro chrome & moving out of few merchant chrome ore miners from the market.
Date: 02 March 2013 Market Outlook Things to watch out for in the Next quarter (April-June)!! There are a lot of important factors to watch out for in the next quarter as unfolding of these announcement will actually determine the market trend. Speaking to various industry experts we found out the following factors that one should watch closely: International Market
• • •
Ferrochrome benchmark price for April-Jun to be announced by mid of March Extension of ESKOM’s buy back agreement beyond 31st March Currency depreciation vs Dollar especially for Japan’s Yen, China’s RMB & South Africa’s ZAR
Domestic Market
• • • •
OMC’s chrome ore e-auction in April– Question lies that will it again fetch higher bids? Resuming of merchant sales by chrome ore miners who moved out of market in Jan-Feb MOIL’s manganese ore price for April-June quarter Possibility of Power tariff hikes during summers
International News Briefs South Africa’s Merafe Resources’ sees FeCr output fall Merafe Resources’ production of ferrochrome was 8% lower in 2012 than in 2011, primarily as a result of weak demand and the company’s participation in Eskom’s power buyback program. Ferrochrome production reached 242,000 mt for the year ended December 2012 compared to 263,000 mt for 2011. Operating capacity during 2012 was reduced to 66% compared to 72% for the prior year
South Africa to review mining royalties this year South Africa will conduct a review of the country’s mining royalties later this year, president Jacob Zuma announced during the annual state of the nation address
Vale’s 2012 manganese ore output down by 7.5%; ferroalloys decrease by 10.6% Vale´s manganese ore output decreased 7.5% in 2012 compared to 2011 to 2.36 million tonnes, according to the company´s annual production report. The fall was prompted by a 9.8% decrease in Vale’s Azul project, in Brazil, which totalled 1.86 million tonnes of manganese ore in 2012, compared with 2.06 million tonnes in the previous year
IFM: H2 2012 ferrochrome sales, production up South African ferrochrome producer International Ferro Metals sales in June-December 2012 totaled at105,095 mt, an increase of
5% over the same period of 2011 and up by 56% from the previous six months. 15% of total ferrochrome sales were through direct sales and included two deals to India for 2,000 mt as well as a 5,000 allocation of ore for the first time.
France’s Eramet manganese alloys output down 7% Eramet produced 730,100 mt of manganese alloys in 2012, down 7% from 2011, as it scaled back output in China, the French producer said Friday. Manganese alloy sales were down 6% year on year at 744,700 mt. “Global manganese alloy supplies remained in surplus in 2012, especially in China due to substantial excess capacity, while demand in Europe was weakened by the 4% fall in steel production year on year,” Eramet said in a statement .
Date: 02 March 2013 This publication is for information purposes only. The information contained in this document has been compiled from sources believed to be reliable. SteelMint cannot be made liable for any loss no matter how it may arise. The recipient of this report must make its own independent decisions regarding any product or items mentioned herein. ŠSteelMint 2010-2012. All rights reserved. No part of this publication (text, data or graphics) may be reproduced, stored in corporate data retrieval systems or transmitted in any form without obtaining SteelMint's prior written consent.
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