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Domestic
COAL
High coal prices to intensify India’s efforts to curb imports, lift domestic supplies
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High seaborne prices for coal will push India to lift domestic supplies and accelerate efforts to curb imports, according to a top government official.
The country’s miners, including state-run Coal India Ltd., are preparing to meet the entire coal demand from grid-connected power plants in the fiscal year starting in April, federal Coal Secretary Anil Kumar Jain said in a phone interview. The government expects a sharp rise in production from Coal India’s mines as well as from captive producers — companies that produce coal for their own use.
Some Indian power producers have sought to secure coal imports after supply disruptions and rising demand left the country grappling with shortages last year, although consistently high seaborne prices may limit such purchases. Those prices have swung wildly this month after Indonesia, the world’s biggest thermal coal exporter, put restrictions on exports and then recently started to ease them.
High import prices present India’s domestic miners with an opportunity to expand their market share, while forcing users to depend heavily on domestic supplies, Jain said..
The largest coal-producing company in the world and a Maharatna public sector undertaking Coal India Limited is upgrading the coal transport facilities in its mines.
The company which contributes around 80 percent to the total coal production in India is using the First Mile Connectivity (FMC) initiative to upgrade coal transport facilities in the mines of Coal India Ltd.
FMC projects are helping eliminate road transportation of coal from pitheads to despatch points. To enable FMC, CIL will Lay new railway lines, Construct new railway sidings, Construct mechanized Coal Handling Plants (CHPS) with Silos.
FMC is helping transport coal using mechanized conveyors & computerized Rapid Loading Systems (RLS). FMC will help the efficient supply of coal to the power plants.
Coal India will complete 35 FMC projects by FY 2324. These projects will help despatch 415 million tonnes of coal annually.
Privatisation is the way forward to regulate coal industry hit by price hike, shortages, say experts
With a rise in coal prices and shortage of supply in the wake of disruptions from Indonesia, the private sector seems like a viable option for the country to emerge from an impending crisis, experts and industry leaders say. “The participation from the private sector is always welcome, as a larger number of participants would not only enhance supply but would also infuse competition,” Vinaya Varma, MD, mjunction Services Ltd, said.
However, at present, private sector participation can only be in the form of increased production from the captive blocks. “It will take some time for the commercial miners to kick-start production from the allotted blocks. As a matter of fact, captive coal production has already shown a healthy growth of over 32 percent year-on-year to around 62 million tons till December 2021,” he said.
Experts say private participation will help but that would take time for output to materialize. There has been interest shown by private players which should help to augment supply. However, the economic viability in the long run for use of coal as fuel is the main issue. Also given the change in focus to renewables, the interest may be limited as potential investors will weigh options.
Also, privatisation will further give a boost to competitiveness in the segment. “While in the short run, Coal India will run the show since it sets price benchmark, going forward, prices will be more competitive..
State-owned miner Coal India's supplies via e-auction has risen 31% so far in the current financial year.
The company's actual dispatches under five e-auction windows were at 77.4 million tonne compared with 59 million tonne a year ago, the miner said in a statement.
Special forward e-auction, the exclusive window meant for power sector, accounted for nearly 28 million tonne of total dispatches.
Coal supplied under other e-auction outlets, where predominantly non-regulated sector customers access coal, accounted for 49.5 million tonne. In this category, Coal India logged a growth of 21% compared to 41 million tonne in same period last year and a two-fold increase over 24.4 million tonne of the comparable period in 2019.
The increase in supplies under e-auction was achieved even though Coal India logged an alltime high of almost 391 million tonne of supplies to thermal power plants during April-December, clocking a 23.3% growth.
Coal India’s total offtake rose to 482 million tonne during the first nine months of the current fiscal, up 18% year-on-year. The state-run company has booked a total of 83.7 million tonne of coal under its five e-auction categories during April-December, an increase of 2.3 million tonne on year.
Coal Ministry PSUs' Capex Rises 28.33%
Public sector undertakings (PSUs) under coal ministry have recorded a capital expenditure of 12,605.75 crore in the first nine months of the current financial year, a growth of 28.33 per cent over 9,822.28 crore in the corresponding period of last year.
"The ministry of coal, through its PSU’s has registered 28.33 per cent YoY growth in capex achievement for the period ending December 2021. As compared to last year achievement of 9822.28 crore for period upto December 2020," the ministry said in a statement.
The ministry said the increased capital expenditure gave impetus to the national economy that has been badly affected due to the Covid-19 pandemic.
"Coal ministry PSU's have done capex of 12605.75 crore, thereby giving a major impetus to the COVID struck economy," it said.
Pralhad Joshi seeks early resolution of South Eastern Coalfield land issues
Union coal, mines and Parliamentary Affairs minister Pralhad Joshi said that he has sought an early resolution of various land-related issues of South Eastern Coalfield Ltd in Chattisgarh.
This comes at a time when the global window for future coal mining is getting shorter with a shift happening towards meeting environment, sustainability and governance (ESG) compliance.
The country’ coal requirement is expected to go up to 1,123 mt by 2023 from the present level of 700 mt. India has the world’s fourth-largest reserves and is the second-largest producer of coal. With a global shift to green energy to address growing environmental concerns, the Indian government is trying to harness coal reserves within the next three decades.
“Joshi also requested the Chief Minister to expedite auction of mineral blocks as per the recent reforms brought about in the mineral sector," the statement said.
India’s coal production went up to 74.78 million tonnes (mt) in December as compared to the same period in 2019.
MCL offers 22.5 lakh tonne coal to power consumers via roadcum-rail mode
State-owned CIL arm Mahanadi Coalfields Ltd said it has offered 22.5 lakh tonnes of coal to power consumers via the road-cum-rail mode as the stock of fossil fuel rises above 12.5 million tonnes at the mines with a gradual increase in output in the last quarter of FY22.
MCL is looking for opportunities to maximise despatch as the company's coal stock is slated to increase further with an increase in production from its mines in Odisha, Mahanadi Coalfields Ltd (MCL) said in a statement.
The offer of 22.5 lakh tonne coal through the roadcum-rail (RCR) mode to consumers was made after this new initiative. A coal allocation of 18 lakh tonnes to state/ central power generation companies in November and December last year successfully helped MCL liquidate stocks.
Till date, more than 8.5 lakh tonnes of coal, equivalent to about 225 rakes, has already been lifted by the state and central power gencos to build up stocks at their power plants.
SCCL to focus on greater asset utilisation
To accelerate coal production so as to achieve the set annual coal production target of 68 million tonnes of coal in the current fiscal, the Singareni Collieries Company Limited (SCCL) initiated a slew of steps to optimally use heavy machinery in opencast projects.
At a high-level review meeting held recently, SCCL Chairman and Managing Director N. Sridhar issued a set of instructions to the officials concerned to enhance utilisation of heavy machinery in open cast mines by putting them to use for at least 18 hours a day.
At present this heavy machinery/equipment are being used for only 13 to 14 hours a day in the SCCL’s OCPs. In order to maximise their usage, the SCCL management has instructed the general managers of the coal mining areas to use the heavy machinery to their full potential for meeting the coal output targets and growing demand for coal through greater asset utilisation.
This forms the crux of the key focus laid by the company management on better usage of existing assets such as Side Dump Loaders (SDL), Load Header Dumpers (LHD), shovels and other high capacity machinery..
RAILWAYS & FREIGHT
Roadmap in place for coal supply: Ministry of railways
The ministry of railways said the public transporter is implementing a roadmap, prepared in consultation with the power and coal ministries, for providing coal rakes to power plants located far away from mines to build up fuel stocks.
The Ministry said the rake supply to such shorter distance plants “naturally” improves because a large number of them are equipped with mechanised unloading systems, especially the ‘hopper’ mechanism, which results in a faster turnaround time of three hours.
The ministry said many rakes had to be “stabled” after distant power plants regulated coal intake in the April-June period of 2020 to save inventory
costs and ran short once power demand picked up. Stocks are being built up now.
Freight margins recover in December
Freight margins have shown some recovery in December as mining, steel and cement freight rates saw a healthy one-month increase in December, and fuel prices stabilized.
For December, CRISIL’s freight index is back to festive levels seen in October, after the extended south-west monsoons negatively affected rates in November. With fuel prices stabilizing, the uptick in business in mining, steel and cement is translating to an increase in margins.
During December 2021, the freight industry saw a margin (free cash flow) of 20 per cent, a five-point bump from November at 15 per cent. Margins in December were the highest since February 2021. “Industries such as mining products (coal, iron ore, and limestone), cement and steel are seeing a sequential recovery as freight rates for these applications have improved by more than 5 per cent. A key driver for this improvement is the resumption in construction and mining activities, which were subdued in December after a slow November due to prolonged monsoon.” said the CRISIL report
STEEL
India's December steel output, consumption down on year
Finished steel production declined by 5.3pc on the year to 9.39mn t in December, while consumption dropped by 15pc from the previous year to 8.73mn t, provisional data from the steel ministry's Joint Plant Committee (JPC) showed. Finished steel comprises alloyed and non-alloyed steel.
Both production and consumption inched higher on the month by 1.9pc and 2.7pc, respectively. Consumption remained weaker in December as buyers postponed purchases in anticipation of lower prices, although the lifting of a construction ban in the northern states and subsiding rains in the south gave way to some demand. rupees/t ($889/t) in December 2021, 29pc higher than the December 2020 average, but lower by 5pc from the November average, when prices hit a new record.
Finished steel output in April-December rose by 22.1pc on the year to 82.21mn t, while consumption jumped by 16pc from the previous year to 75.85mn t, the JPC data showed. Crude steel production in December fell by 3.9pc on the year, but inched up by 0.6pc on the month to 9.89mn t. Hot metal production dropped by 3.3pc on the year to 6.45mn t, but rose by 2.6pc on the month..
FICCI seeks zero customs duty on ferronickel; higher import levy on stainless steel flat products in Budget
Ahead of the Union Budget, industry body FICCI has requested the government to reduce the basic customs duty (BCD) on ferronickel to zero and levy a higher duty of 12.5 per cent on the import of stainless steel flat products.
At present, while the BCD on ferronickel is 2.5 per cent, the same on stainless steel flat products is 7.5 per cent. On stainless steel scrap, zero customs duty is applicable up to March 31, 2022.
Putting its case for zero duty on ferronickel, Ficci said it is the most important raw material used in stainless steel making. The stainless steel industry meets the bulk of its nickel requirements through ferronickel and stainless-steel scrap routes, as pure nickel is very expensive.
Due to the non-availability of ferronickel in the country, domestic stainless steel producers are forced to import it from countries like Japan, South Korea and Greece. This is because India is deficient in nickel ore, and therefore, there is no production of ferronickel within the country. Besides, no customs duty is not applicable on ferronickel originating from Indonesia and Japan due to India-ASEAN FTA and India-Japan CEPA
JSW Steel banks on firm prices, auto sector demand
India’s second largest private sector steel producer JSW Steel recorded a steep jump in profit in the third quarter on a year-on-year basis even though it was down on a quarter-on-quarter basis.
The company had acceleration in demand will happen in the second half of this fiscal and it would be better than the first half. While demand grew 9 per cent in Q3 over Q2, there was 7 per cent fall yearon-year.
However, from the middle of December, news started swirling around that the cut would not happen any further. The Government nreduced interest rates, eased credit restrictions. With that, iron ore prices which slid to $87 a tonne shot up to $137 a tonne. Coking coal prices, which dropped to $314 a tonne, went back to $445 a tonne.
This has led to a major cost push for the Steelmakers as Steel prices also moved up to $790 a tonne FOB (free on board) from $770 a tonne. These movements signal to us that steel prices will not fall further. Plus, there will be re-stocking in the market.
The company said auto sector, which was weak in Q3, is coming back and will be a major driver for the Steel industry. Passenger vehicles have picked up while demand for light commercial vehicles is also expected. Demand for appliances, packaging and the renewable sector will continue. In infrastructure, demand from pipelines is strong, be it water or petroleum..
Indian Steel Association seeks restoration of import duties
The Indian Steel Association (ISA) has proposed anti-dumping and countervailing duties are restored on certain imports of finished steel.
Among these is the countervailing duty on some hot and cold rolled stainless steel flat products from China. It also wants anti-dumping duties on imports of aluminium and zinc coated flat products originating in or exported from China, Vietnam and Korea, and on straight-length alloy bar and rod imports from China. It has asked the finance ministry to restore these measures by 31 January, Kallanish notes.
These duties were all suspended 12 months ago to help steel users amid then surging prices (see Kallanish passim).
ISA has also requested the ministry extend antidumping duties on hot-rolled, cold-rolled and colourcoated flat steel, as well as wire rod, in order to safeguard the domestic steel industry from “dumped imports at predatory prices”. Authorities revoked these measures earlier this month.
RSP steel to be used by Indian Navy for making submarines
The Rourkela Steel Plant, a unit of Maharatna public sector undertaking SAIL, has received a certificate from the Indian Navy for producing high-strength steel for making submarines, a statement said.
As a policy, the Indian Navy is using indigenous steel for its ship and submarine manufacturing. The RSP is fulfilling the needs of a tough and meticulous customer like the Indian Navy for the last 10 years... commencement of commercial production of the submarine grade steel will further strengthen our association.
The RSP has so far supplied more than 7,000 tonne of steel, adhering to stringent quality specifications for use in various naval applications, a source of the unit said.
The special plate plant of the RSP that is dedicated for making steel for the defence sector has been relentlessly working towards developing new grades of customised products that can absorb high ballistic impact, the statement said.
The high-quality steel is being developed with years of research and several rounds of testing, it added.
Tata Steel’s India sales drop in October-December
Steel sales dropped by 5.2pc on the year to 4.41mn t during the October-December quarter, while production rose by 4.3pc to 4.80mn t, according to provisional data released by the company.
The firm's India production during the first nine months of the financial year ending March 2022 rose by 16pc on the year to 14.16mn t, while sales during the same period gained by 4pc to 13.15mn t as a result of continued economic recovery. Exports accounted for 14pc of total sales.
India's finished steel production and consumption dropped on the year in December, but rose on the month, pointing to an improving steel demand scenario in the country. The country's exports in November fell to their lowest in the current fiscal year ending 31 March on uncompetitive Indian offers.
Deliveries for automotive and special products rose by about 50pc on the quarter, while branded products and retail rose by 2pc from the previous quarter, and industrial products and projects rose by 3pc.
CEMENT
Cement volume likely to be lower in Q3FY22 on seasonal weaknesses
Seasonal weaknesses that embrace prolonged monsoons, primarily in south India, a ban on development actions in the Delhi-NCR area and different components like subdued demand, would possibly lead to Indian cement corporations witnessing a 4–6 per cent decline in volume for the quarter-ending December 2021 (Q3FY22).
Although realisations are up by 5–7 per cent on a pan-India foundation, these could not be sufficient to cowl enter value improve. Thus, value hikes from January are anticipated, sellers and cement firm executives say.
Pan-India costs are likely up 5 per cent, led by a ten per cent rise in the West and 5-7 per cent improve throughout the remainder of the areas, besides in the South the place costs are likely flat.
Sources say the Eastern area might even see a low double-digit volume decline YoY owing to the transporters’ strike in Chhattisgarh, sand unavailability in Bihar, amongst different components. Other areas might even see a low single-digit YoY volume decline.
November slowdown
While demand gained tempo in October 2021, it slowed down considerably in November due to the development ban in the NCR, prolonged monsoons in the South and some states in the North, sand points in the Eastern area in addition to in elements of UP, and the Diwali vacation season, Axis Securities mentioned in a report.
UltraTech Cement to expand Birla White cement production capacity
UltraTech Cement plans to invest US$129m in capacity expansion projects in order to increase the production capacity of its Birla White brand white cement by 93% to 12.5Mt/yr from 6.5Mt/yr. The Aditya Birla subsidiary says that it will commission the new capacity in a phased manner. The investment aims to strengthen Birla White cement’s presence in the growing white cement market and to reduce its dependence on high-cost imports.
