Domestic

Coal India records 18% increase in coal production in October

Coal India Limited, an Indian public sector coal mining and refining firm, has reportedly announced the production of 46.8 MT of coal last month, recording a growth of 18.4 percent. The company had produced 39.5 MT of coal in the same month of the prior fiscal year. The state-owned firm said in the statement that the increase in coal production in absolute terms was 7.4 MT. With its coal production hindered by the COVID-19 pandemic induced slowdown during the first four months of the current fiscal, the company started recording positive growth from August onward on a month-on-month basis. For the first time in the current fiscal, it posted a positive growth of 0.9% in cumulative production till October thus far. Sources cite that the company produced 282.9 MT of coal during April-October, which was 2.5 MT more than that during a similar period the previous year. Though the positive growth in coal production was nominal, the company could wipe off the negative trend and is looking forward to consolidating the positive growth pattern for the rest of the fiscal, a senior official of CIL said.

SC grants time to Centre to file report on impact of commercial coal mining on environment

The Supreme Court has granted time to Central government to file a report explaining how commercial coal mining in Jharkhand would not have an adverse impact on the environment. The court expressed its intention to formulate a committee of experts and put an interim stay on the auction of coal blocks. The court was hearing the plea filed by

Jharkhand government challenging the Centre's decision to auction 41 coal blocks for commercial mining. The Jharkhand government has approached apex court as 9 of the 41 coal mines are in Jharkhand and the state alleges that it would destroy forests and tribal culture and customs. Further the auction would also not fetch adequate price as per the Jharkhand government. The bench headed by Chief Justice SA Bobde expressed the court’s intention to formulate a committee of experts to ascertain the ecological impact of the commercial coal mining project. Attorney General KK Venugopal, representing Centre, opposing the stay contended that a stay would impact the bidding process across the country and sought some time to place material on record clarifying that the animal corridors would not be disturbed by the mining project.

Auctions for commercial coal mining: Conservative bidding in phase 1; low revenue sharing welcomed

The first phase of auction of coal blocks for commercial use witnessed conservative bidding from industry players due to the type of blocks on offer and potential issues around land acquisitions and forest clearances, according to experts. Auctions of 18 coal blocks for commercial use have been completed, with experts noting that the revenue share offered by bidders was lower than expected. The government is set to announce the results on November 11. A number of the mines put up for auction were in forested lands and that issues around obtaining forest clearances and land played a role in lack of interest for the mines the government had offered. The revenue share offered by bidders for large coal blocks with annual peak rated capacity of over 3.0 million tonnes has ranged from 12.5 to 25 per cent, with the Urma Paharitola block in Jharkhand attracting the highest bid of 26.5 per cent from Aurobindo Realty and Infrastructure Pvt Ltd. among the larger coal blocks on offer. The auctions have not garnered the level of interest that the Centre had indicated while announcing the first set of 38 coal blocks to be offered for commercial mining. Only 23 of the blocks received bids, with only 19 which received two or more bids being put up for auction. It may be also noted that there was little interest from international players as they were moving towards reducing their coal investments.

Next round of commercial coal mine auction in Jan: Coal Minister

Coal Minister Pralhad Joshi on Thursday said the Centre is planning to go for next round of auction of blocks in January and also appealed to the states to cooperate with commercial mine allottees to facilitate early operationalisation of the blocks as it would create a positive atmosphere and boost confidence of investors. The statement assumes significance as of the total 35 coal mines successfully auctioned in the last 10 tranches of auction, only 14 blocks could begin operations. He said, "Allow the 19 bidders which have been allotted blocks to operationalise the mines. Rest will also get confidence. So we will have to create such atmosphere. Cooperation means you (state) should get them (allottees) earlier clearances for the blocks...We want cooperation from state governments with regard to land acquisition, pollution control board." The minister further said that before the sale of blocks began, the Jharkhand government was of the view that if the auction took place during COVID-19 times, not much revenue would be generated. But in contrast, he said the Jharkhand government will be receiving the highest revenue amongst all states, of Rs 2,690 crore per annum from the auctioned blocks. Joshi had said 42 companies participated in the auction, out of which 40 were private players. Total 76 bids were received for 23 mines, wherein 19 mines had received two or more bids and were found eligible for opening of technical bids..

RAILWAYS

100 rakes of coal, 70 with fertiliser lying idle: Railways

Nearly 230 trains loaded with essential goods are waiting idle outside Punjab for the last nearly one month due to protests by farmers in the state, according to Railways officials. Coal for power plants, petroleum products meant for the state as well as for Ladakh and J&K, and fertiliser for the farmers are the main items in these rakes.

Chief among them are 100 rakes of coal meant for the five power plants in the state. With the blockade stretching to over a month, they have been moved away and kept in various loop lines in Delhi and Haryana, a Northern Railway official said.

Around 10-12 rakes of coal service these power plants every day. Punjab has expressed concern that if coal stock of the power plants is not replenished in time, the state will face power crisis in the winter. Around 70 rakes of fertiliser are also lying idle at various places in Northern Railway zone awaiting clearance, official data show. Railways officials said that as per annual routine, rakes loaded with fertiliser are prioritised across India to service Punjab in the kharif and rabi (October to March) seasons. Thirty rakes of petroleum product meant for the state as well as supplies to Ladakh and J&K are alsoawaiting clearance. Ladakh’s fuel requirement is crucial to be fulfilled before the winter, and this is the time for supply. The rest are containers with various kinds of goods meant of multiple places, records show. Officials said an estimated 5,000 containers loaded with woolens and hosiery from the industrial belt in Punjab are awaiting clearance to go to the ports for export.

On fast track: Railways’ freight earnings, loading rise in October

Railways freight earnings as well as loading saw a significant rise in October 2020, reflecting a trend of economic revival on the back of five rounds of unlocking of the economy. While Railways freight loading was up 15 per cent at 108.16 million tonnes (93.75 million tonnes), its freight earnings for October grew 9 per cent to 10,405.12 crore (9,536.22 crore), an official release said. In September, the Railways earned 9,896.86 crore in freight earnings and loading was at 102.12 million tonnes (mt). This latest Railways freight earnings and the strong show in GST collections for October is a clear pointer that economy has normalised to a large extent, say economy watchers. In October, the public sector behemoth’s loading was 108.16 mt which includes 46.97 mt coal, 14.68 mt iron ore, 5.03 mt foodgrain, 5.93 mt fertilisers and 6.62 mt cement (excluding clinker). It is worth noting that a number of concessions/discounts are also being given in Indian Railways to make Railways Freight movement very attractive. The Ministry of Railways had held meetings with top leadership of iron & steel, cement, power, coal, automobiles and logistics service providers.

DFC project: By 2021, Indian Railways’ freight trains can ply on 40% of Dedicated Freight Corridors; details

The Dedicated Freight Corridor Corporation of India Limited (DFCCIL) recently announced that Indian Railways will be running its freight trains on 40% of the dedicated freight corridor (DFC) by next year. The DFC project is one of the Indian Railways’ largest infrastructure projects, undertaken by the government at a cost is Rs 81,459 crore, according to a PTI report.

The 1,504 kms long Western DFC is from J N Port in Mumbai, Maharashtra to Dadri in the state of Uttar Pradesh and the 1,856 kms long Eastern DFC is from Sahnewal near Ludhiana in Punjab to Dankuni in the state of West Bengal. DFCCIL MD, R N Singh was quoted in the report saying that 40% of the DFC route km is expected to be completed in the financial year 2020-2021. According to Singh, from Khurja, Kanpur, Rewari, Dadri, Ajmer, Palanpur to Gujarat ports will be connected by the end of 2021. This will give a boost to the region’s industrial scenario. He further said, by March 2022, most of the sections will be commissioned and the remaining Eastern DFC and Western DFC will be commissioned by June 2022. According to the officials, once the Dadri to Rewari section of the DFC is completed, the ‘Roll-on Roll-off (Ro-Ro)’ services of the national transporter can begin, leading to a significant reduction in pollution in the Delhi-NCR region.

STEEL

Q3 recovery in steel demand better than expected

The post-lockdown recovery in steel demand has been stronger than initially anticipated, for mostcountries. As a result, the PMI readings for the majority of nations showed considerable improvement, during the July/September period. Many returned above 50 – indicating an expanding economy. Several individual country PMIs even surpassed pre-pandemic figures, most notably Brazil. In China, the first country to be hit by the pandemic, the resumption in activity started towards the end of the first quarter. The country’s Caixin General Manufacturing PMI only dropped below 50 during two months of this year – February and April. Nevertheless, output in most countries remains below pre-pandemic volumes, most notably, in Europe, Japan and the US, where some of the most drastic cuts in steelmaking were recorded, in the second quarter. MEPS estimates that finished steel production, in the EU, fell by 18.4 percent in the July/September period, year-on-year. Despite Japan’s ability to effectively control the virus, finished steel output in that country is forecast to decline to around 71.3 million tonnes in 2020 – a reduction of approximately 17 percent, compared with the previous year’s total. In the US, capacity utilisation rates have improved but remain at around 70 percent. Many steelmakers are reluctant to resume full operations, while the world still battles to control the virus.

Arcelor Mittal-Nippon Steel lays out large expansion plan, seeks support

Sanguine about India’s high growth potential in the steel sector, AM/NS India has approached the government, seeking specific policy support to an ambitious plan to expand its steel-making capacity in India with “significant investments”, according to a senior company executive. The company is primarily evaluating the option of a large green-field facility in eastern India, but may also opt for further expansion through the inorganic route. AM/NS India, a 60:40 joint venture between world’s largest steelmaker ArcelorMittal and Japan’s Nippon Steel Corporation, had acquired Essar Steel’s 9.6 million tonne Hazira plant for `42,785 crore in December. This was the country’s largest stressed-asset deal and marked Arcelor-Mittal’s entry into India’s potentially fastgrowing steel industry. Senior representatives of AM/NS India have recently made a presentation to Union steel minister Dharmendra Pradhan on the firm’s likely investment proposals in the country. They also explained to the minister the support that the company would be requiring, from the Centre and the concerned state governments for the plans to materialise. Despite the Covid-19 pandemic, AM/NS India

did well compared to peers in India in first three full quarters of 2020 since the Hazira unit acquisition – it clocked $423 million as earnings before interest taxes depreciation and amortisation (Ebitda) in the January-September period. India’s current installed capacity is around 140 mtpa. The country aspires to have 300 mt installed capacity by 2030-31. India’s per capital steel consumption is still around a third of the global average.

CEMENT

Seeing better demand from small towns, rural areas: Shree Cement

Demand is good from tier-II, III and rural India, said HM Bangur, MD of Shree Cement, said in aninterview with CNBC-TV18. He added that demand in North and East India was very good. “Tier-I cities are having some problem as far as builders are there. They are not getting as gooddemand,” Bangur said. “But overall, I can say as East there is less urbanization, the demand was better. North India the demand was good. South India we are seeing very good demand because it was a plant which was being matured. So, overall in future quarters also such demand should be there,” he said. On sales volume, Bangur said that the growth has come from new plants. “South India our volume is 85 percent or so because south last year was a new plant only taking its roots. Similarly in East India. So, now about 25 million will be our volume,” he said. Bangur said that EBITDA per tonne has to be more than Rs 1,500 for plants to be viable. “In the commodity industry, we can talk more about our cost. EBITDA is a matter of sales price which will be fluctuating up and down. We are taking 4

Cement to remain strong in 2HFY21 on expected pricing strength

The Covid-19 pandemic changed the trend in cement pricing this year. Contrary to historical trends of the lower cement prices QoQ in the third quarter of the calendar year due to softness in the demand owing to the festive season (Diwali) as well as the lower exit prices in Q2 on account of the Monsoon, cement prices have surprised by rising this year. In the third quarter of FY21, average cement price is up 0.8 per cent QoQ so far across India as against a decline of 1.1 per cent - 0.7 per cent QoQ seen in the past 5-10 years. The same is up 7 per cent YoY to Rs 360/bag. According to the cement report from Motilal Oswal Financial Services, cement volumes are growing over 10 per cent YoY in North, East and Central India. While demand has remained weak in the South and Maharashtra, it has recovered strongly from the 15-20 per cent YoY decline seen in 2QFY21. Prices in South India have been particularly strong and are up 18 per cent YoY (flat QoQ). Prices in North/West/Central are up 7 per cent/6 per cent/5 per cent YoY and 3 per cent/1 per cent/2 per cent QoQ. Non-trade prices have also recovered, particularly in the North where it had fallen sharply, as institutional demand (from urban real estate, infrastructure, etc.) has been improving. The brokerage said that Even as variable costs rise, cement spreads (price minus power and fuel and freight costs) are expected to remain strong in 2HFY21 on expected pricing strength. Volume recovery post the lifting of Covid-19 led restrictions has continued to gain strength. After growing by five per cent YoY in 2QFY21, Motilal Oswal Financial Services expects volumes for its coverage universe to grow 12 per cent YoY in 2HFY21E.