This page was last modified on Friday, January 27, 2012 10:17:16 PM
1-27-12
Weekly Trade Update:
Brazilian main miner is preparing 2 huge vessel loads of iron ore for Philippines from where they would be shipped into China in smaller vessels. This process would start as early as the next week. With Australia’s supplies likely to be delayed and disrupted in the coming weeks due to rains and cyclones, it seems the miner has well planned the new move to take full advantage of the market conditions.
| | 20th January 2012 | 27th January 2012 | Weekly Change % |
OTPX 63.5/63% FOB Vizag | FOB Vizag {OreTeam Price Index} | 132 | 132 | 0 |
OTPX 58% FOB Goa | FOB Goa | 106 | 106 | 0 |
| | | | |
China Domestic Iron Ore | Fines, RMB wmt (avg) 66% | 870 | 870 | 0 |
China Domestic Iron Ore | Fines, RMB wmt (avg) 63% | 1030 | 1030 | 0 |
| | | | |
Indian Domestic Iron Ore | Fines, EXW 63.5/63% Orissa | 3000 | 3000 | 0 |
Indian Domestic Iron Ore | Lumps, EXW 10-30 mm 63% Orissa | 2400 | 2400 | 0 |
Indian domestic Iron Ore | Pellets, EXW Orissa | 8800 | 8800 | 0 |
| | | | |
Pb Fines Australia | 61.5% | 142 | 142 | 0 |
Mac Fines | | 140 | 140 | 0 |
Yandi Fines | 58% | 129 | 129 | 0 |
Brazil Fines | 64% | 152 | 152 | 0 |
| | | | 0 |
*since closing is after 17:00 IST, the previous day closing is taken into consideration; All Values in $/ton except where mentioned |
OreTeam’s Poll Results on “Will iron ore spot prices touch $155/t CFR (63.5/63% Fe) post Chinese vacations in early Feb?” indicate ::
· 56% participants optimistic about the post-vacation levels to touch $155 per ton from the current $148 per ton CFR levels, which is an increase of nearly $7 per ton.
· 36% believing that the prices will not touch the $155 per ton levels but may move up few dollars.
· 8% not holding a definite view.
o OreTeam’s view sits in between the 56% and 36% where the price might move up by $1-3 per ton but may not touch $155 per ton CFR in the opening week.
Steel::
| | 20th January 2012 | 27th January 2012 | Weekly Change % |
Steel India | Billets, Raipur (Rs/ton) | 31200 | 31200 | 0 |
| Rebar, New Delhi (Rs/ton) | 44100 | 44600 | 1 |
| HRC, Mumbai (Rs/ton) | 39600 | 39600 | 0 |
| Wire Rod, MGG (Rs/ton) | 38800 | 38800 | 0 |
| Sponge Iron, Raipur (Rs/ton) | 23500 | 23900 | 1.70 |
| Pig Iron, MGG (Rs/ton) | 32200 | 32200 | 0 |
| | | | |
China Steel | Rebar (avg) RMB/ton | 4120 | 4120 | 0 |
| Wire rod (avg) RMB/ton | 4315 | 4305 | 0 |
| Billet (avg) RMB/ton | 3710 | 3710 | 0 |
| HRC (avg) RMB/ton | 4385 | 4385 | 0 |
| | | | |
International Scrap | CFR WCI, HMS (1&2) | 470-480 | 470-480 | 0 |
| CFR WCI, Shredded | 485-495 | 485-495 | 0 |
| Turkey, HMS (1&2) | 465-470 | 465-470 | 0 |
| Turkey, Shredded | 475-480 | 475-480 | 0 |
| | | | |
SHFE Rebar (RMB) | May 2012 | 4315 | 4315 | 0 |
| Oct 2012 | 4329 | 4329 | 0 |
| | | | |
SSEC | Mar 2012(Open) | 4300 | 4300 | 0 |
| | | | |
LME Billet* | Cash Buyer | 509 | 517 | 1.57 |
| Cash Seller | 511 | 519 | 1.56 |
*since closing is after 17:00 IST, the previous day closing is taken into consideration; All Values in $/ton except where mentioned |
Freight::
| | 20th January 2012 | 27th January 2012 | Weekly Change % |
OTFX Superhandy Freight | ECI to China {OreTeam Freight Index} | 14 | 14 | 0 |
| WCI to China | 16 | 16 | 0 |
OTFX Panamax Freight | ECI to China | 13 | 13 | 0 |
| WCI to China | 15 | 15 | 0 |
| | | | |
Freight (Points) | Baltic Dry Index (BDI) | 893 | 753 | -15.67 |
| Baltic Cape Index (BCI) | 1559 | 1477 | -5.25 |
| Baltic Superhandy (BSI) | 858 | 721 | -15.96 |
| | | | |
Bunker Prices Singapore | IFO 138 | 725 | 725 | 0 |
| IFO 190 | 742 | 738 | -0.53 |
| MGO 150 | 950 | 950 | 0 |
*since closing is after 17:00 IST, the previous day closing is taken into consideration; All Values in $/ton except where mentioned |
Equity Market::
|
| 20th January 2012 | 27th January 2012 | Weekly Change % |
Sesagoa | Rs | 193.8 | 215 | 10.93 |
NMDC | Rs | 179.15 | 189.3 | 5.66 |
JSW | Rs | 673 | 679.6 | 0.98 |
SAIL | Rs | 93.15 | 107.4 | 15.29 |
Tata steel | Rs | 444.3 | 462.5 | 4.09 |
CIL | Rs | 352 | 347.9 | -1.16 |
Adani Power | Rs | 89.7 | 89.15 | -0.61 |
NTPC | Rs | 175.45 | 178.7 | 1.85 |
Reliance Power | Rs | 92.7 | 99 | 6.79 |
TATA power | Rs | 106.7 | 106.7 | 0 |
Gujarat NRE | Rs | 23.35 | 23.1 | -1.07 |
| | | | |
Rio Tinto | ASD | 67.53 | 69.78 | 3.33 |
BHP Billiton | ASD | 37.48 | 37.66 | 0.48 |
Fortesue (ASX) | ASD | 5.19 | 5.06 | -2.50 |
China Shenhua Energy Comp (SHA) | RMB | 27.48 | 27.48 | 0 |
China Coal Energy Comp (SHA) | RMB | 9.66 | 9.66 | 0 |
*since closing is after 17:00 IST, the previous day closing is taken into consideration |
Japan scrap market to revive after Chinese holidays 1-27-12
TOKYO: Japanese copper scrap market expects higher price in coming spring. The scenario is the price would increase toward March and April after Chinese New Year when copper ingot price started to increase at New York Commodity Exchange.
Japanese scrap price is still weak but a dealer source said the users' purchase could turn the market into upward under lower scrap generation.
Offshore copper ingot price started to rebound in third week of January. The price reached more than USD 8,350 per tonne at London Metal Exchange and 379.75 US cents per pound at COMEX. The price recovered 4 month high.
Japanese industry sources see the ingot price would slow down due to slow market under Chinese New Year. However, the sources expect the market could increase again and depending on Chinese mover, the price could increase to higher level.
Japanese official copper ingot price could increase by additional JPY 20,000 per tonne from current JPY 670,000. Under the higher price expectation, scrap dealers try to secure more scrap from the market. If the official price would reach JPY 700,000 or more, the dealers with high priced inventory could liquidate the stock.
More Market Highlights 1-25-12
· Indian steel markets on a roller coaster ride. Ingot prices roll down by nearly Rs300-400 per ton by evening after opening strong early in the morning. The trade has been quite slow mainly at MGG, Ghaziabad, Delhi and some parts of the eastern region.
· Sponge iron prices which had rocketed by nearly Rs1000-1500 per ton have also dipped by nearly Rs500-700 per ton this evening.
· Steel long also had a hard day with a drop of nearly Rs300 per ton in northern and western markets.
· Scrap prices in Alang sector for domestic melting scrap were down by Rs 100 per ton near closing this evening.
· The lack of a good confidence and the volatility in the steel demand is causing this kind of price fluctuation in the market. The steel traders had increased and sold their products earlier hence they wouldn’t be hurt much in this process of downscaling their prices.
· On the other hand, India's central bank Tuesday held its key lending rate steady for a second straight policy meeting, but cut the minimum cash reserve requirement for banks by 0.50 percentage point to relieve tight liquidity in a surprise move which could mark the beginning of a policy shift toward supporting economic growth. The RBI kept the repurchase rate unchanged at 8.50%, the reverse repurchase rate--or its borrowing rate--steady at 7.50%, and the marginal standing facility rate at 9.50%.
· In Europe, stocks declined from a five-month high as the region’s finance ministers failed to agree on a debt-swap deal for Greece and called for a greater contribution from bondholders. U.S. index futures retreated and Asian stocks fluctuated.
Equity Markets:
· Indian shares rose 1.46 percent on Tuesday to their highest close in 10 weeks. The Bombay Stock Exchange benchmark Sensex on crossed the 17,000 mark before easing a bit to close the day 244 points up as investors cheered RBI move to cut cash reserve ratio to infuse liquidity in the system.
· The 30-scrip Sensex crossed the crucial 17k mark before ending 244.04 points, or 1.46 per cent, up at 16,995.77.
· The 50-issue National Stock Exchange index Nifty regained the crucial 5,100 level, adding 81.10 points and closed at 5,127.35.
· In Australia, Australia's largest miner and listed company, BHP Billiton ( BHP ) fell 0.43 pct or 16 cents to $37.08 while the second largest miner, RIO Tinto ( RIO ) rose 0.68 pct or 46 cents to $68.35.
| Today's High | Today's Low | Previous Day Close | Previous Day Open |
Sesagoa | 192.5 | 185.9 | 188.15 | 188.1 |
NMDC | 178.1 | 175.1 | 176.05 | 177.7 |
JSW | 659.1 | 623.65 | 632.55 | 632 |
SAIL | 96 | 92.2 | 92.5 | 92.8 |
Tata steel | 439.95 | 422.1 | 426.7 | 429 |
CIL | 337.4 | 328.45 | 334.4 | 332.5 |
Adani Power | 89.7 | 87.5 | 88.25 | 88.9 |
NTPC | 177 | 172.8 | 175.65 | 175.05 |
Reliance Power | 97.25 | 92.1 | 92.8 | 92.6 |
TATA power | 108 | 103.9 | 104.9 | 104.7 |
Gujarat NRE | 22.4 | 21.8 | 22.15 | 22.15 |
| | | | |
| | | | |
| Today's Price | % changes | | |
Rio Tinto | 68.35 | 0.68 | | |
BHP Billiton | 37.08 | -0.43 | | |
Fortesue (ASX) | 4.92 | -1.6 | | |
China Shenhua Energy Comp (SHA) | 27.48 | 1.4 | | |
China Coal Energy Comp (SHA) | 9.66 | 0.84 | | |
Market This Morning: 1-24-12
· Domestic iron ore lump prices in India remain under a close scrutiny by the DRI plants. Sponge iron producers not happy with the volatility in prices with no fundamental reasoning for the hike.
· Steel ingots, billets and scrap prices saw a battering last evening as the market is seeing a very uneven demand. There was plenty of buying in the market in the early weeks of 2012 which allowed the prices to move up and hit the peak. Now with the prices already reaching the peak the demand has slowed down and buyers are staying on the sidelines to allow some cooling. The prices are likely to slide down further to Dec’11 end levels.
· The onset of the summers will bring in more relief to the steel producers in the country and till then the prices are expected to fluctuate in the same range.
· The domestic scrap market is already reaching its peak and with the slow consumption prevalent in the market, there could be a downward trend visible in the prices soon. The imported prices from EU and Middle East have already come down by nearly $10 per ton in the last week and US supplies are not making their way into due to high prices. There is a very good possibility that the US scrap prices may also come down as buying has softened in the country post hike in the prices. The domestic transactions have come down by nearly $10 per ton in the last few days.
· Vale Lifts Force Majeure on Iron-Ore Sales as rains recede.
Paper Trade:
· SGX iron ore 62% Fe swaps are not holding enough ground in the absence of the physical trade. The calculated Q1’12 fell nearly -0.5% and Q2’12 down by -0.70% last evening. Most of the contracts were down at the exchange and volumes also kept quite low.
· At LME the situation changed by mid day yesterday. The trading was slow but prices held onto their strong levels. Although, the same didn’t apply to the steel billets which moved in the opposite direction to the other metals. The cash buyer/seller fell by nearly -0.97% to close at $509/511 on Monday. With Euro closing higher than 1.30 versus the dollar the technicals are quite sound at the market and there is a good air of optimism at the equity and currency trade. The same may be visible in the steel trade in the later-half of the day.
· Steel long contracts at NCDEX fell last evening by almost 3% for Feb’12 contract and 2% for Mar’12. The closing was recorded at Rs32440 and Rs33170 respectively. This morning the trade has traded quite weak with no indications of a solid improvement through the day.
Equity Market:
· Asian stock markets mostly rose Tuesday, shrugging off tough negotiations between Greece and its creditors amid expectations a deal to cut the country's debt mountain will ultimately be reached.
· Japan's Nikkei 225 stock average was up 0.4 per cent at 8,798.25 and Australia's S&P/ASX 200 added 0.3 per cent to 4,237.20. Indonesia's benchmark climbed 0.7 per cent to 4,014.37. New Zealand's index fell 0.5 per cent to 3,278.00
· Hopes that Greece will reach a deal with private creditors on lowering its debt — despite a delay in talks between Athens and banks' representatives — supported European markets on Monday and sent the euro up to three-week highs above $1.30.
· In India, as investors await the central bank's rate decision due at 11 a.m this morning. The Reserve Bank of India (RBI) said on Monday the growth outlook and business climate have weakened but warned of upward risks to inflation, reinforcing expectations it will keep interest rates on hold.
· SAIL was up by 1.35% this morning where as Tata Steel was down -0.26%, NMDC down -0.34% and JSW Steel by -0.39% respectively.
Market NEWS - 1-23-12
· Indian domestic steel market stays quiet as steel sale isn’t picking up as fast as expected in most of the mandis (regional-markets).
· The construction sector has slowed down as well as compared to last year and pressure is visible on the steel producers.
· Domestic and imported scrap prices have moved up away from the interest levels of the steel/DRI and producers which is allowing them to hike their prices.
· The local fine prices have also been increased in the last few days mainly because of two reasons –
o The later half of the year the fines availability would increase putting pressure on the prices which will pull down the prices. Just to evade that fall the prices have been moved up now.
o Secondly, the steel prices were increased by big producers which gave some hope to the local producers as well. But the flow of price increase hasn’t happened as yet.
· With no iron ore spot trade, OreTeam Price Index for Indian iron ore and OreTeam freight index for India-China freight remain unchanged this evening.
· World crude steel production reached 1,527 megatonnes (Mt) for the year of 2011. This is an increase of 6.8% compared to 2010 and is a record for global crude steel production.
Paper Market:
· At NCDEX, the steel long contracts have declined by Rs500 – Rs700 per ton for Feb, Mar and Apr contracts. This shows the optimism prevailing in the market. The exchange had moved up earlier last week registering good gains but this week the start has been negative so probably there could be some upside in the coming days.
· SHFE and SSEC remained closed.
· At LME, the trade is fluctuating. Morning the metals were weak and then there was some movement upwards but then the optimism seem to have lost the way. The impact of the Chinese vacations was visible at LME as well which is trading very thin volumes.
Equity Market:
· Asian stock markets were mixed in thin trade on Monday, as investors were jittery while Greece and private creditors struggled to reach an agreement on restructuring the country’s sovereign debt.
· Markets in China, Hong Kong, Indonesia, Malaysia, Philippines, South Korea, Singapore and Taiwan were closed for holidays.
· Indian shares moved sideways before ending on a flat note as investors reacted to mixed quarterly results and lackluster global cues amid apprehensions over the outcome of Greece's talks with private creditors.
· Rate-sensitive banking, auto and realty stocks ended on a firm note despite speculation that the Reserve Bank of India may not cut key interest rates at its monetary policy review scheduled tomorrow.
| Today's High | Today's Low | Previous Day Close | Previous Day Open |
Sesagoa | 194 | 185.1 | 189.4 | 189 |
NMDC | 178.75 | 170.2 | 172.5 | 170.2 |
JSW | 647.5 | 629.05 | 648 | 630 |
SAIL | 93.45 | 91.35 | 91.6 | 91.4 |
Tata steel | 437.9 | 423.6 | 436.6 | 434.85 |
CIL | 342 | 332.35 | 343.8 | 342 |
Adani Power | 89.95 | 87 | 87.7 | 88.2 |
NTPC | 177.55 | 172.75 | 174.35 | 173 |
Reliance Power | 93.35 | 90.5 | 91.35 | 91.35 |
TATA power | 108.4 | 104 | 104.95 | 106.4 |
Gujarat NRE | 22.75 | 21.4 | 21.85 | 21.7 |
| | | | |
| | | | |
| Today's Price | % changes | | |
Rio Tinto | 67.89 | 0.53 | | |
BHP Billiton | 37.24 | -0.64 | | |
Fortesue (ASX) | 5 | -3.66 | | |
China Shenhua Energy Comp (SHA) | 27.48 | 1.4 | | |
China Coal Energy Comp (SHA) | 9.66 | 0.84 | | |
Iron Ore & Steel 1-23-12
· No Movement was recorded at the OTPX last week. The index remained stable with no change as the transactions remained very low.
· China has closed for vacations and till 30th Jan 2012, new trades will not be visible.
· Indian domestic iron ore prices stay calm through the week but some miners and pellet makers were heard moving up their offers by Rs200 per ton. Confirmations will be achieved early this week.
· Movement of ore from the NMDC mines is still on hold due to the protests by the locals. New quarterly prices are also yet undecided by the Board.
· Indian pellet making capacity to touch 80 million tons by year 2015.
· Stemcore’s iron ore transportation slurry pipe line’s 10Km route stuck in the environment clearance phase. Likely to get the green clearance soon.
· Indian steel prices are floating good this morning. Likely upward movement visible through the day. Optimism is surrounding the market space.
· Some good news for Indian and US steel markets where as other markets are keeping very quite. To read the whole article on World Steel Outlook 2012, please click here.
· U.S. steel exports were up 10.6 percent through the first 11 months of last year and approached pre-recession levels. November exports totaled 1.23 million tons, up 21 percent from November 2010 and 6.7 percent above October levels. Through the year’s first 11 months, exports totaled 12.253 million tons, up 47 percent above recession levels in 2009 and only 4 percent below January-November levels during the record year of 2008.
| | 13th January 2012 | 20th January 2012 | Weekly Change % |
OTPX 63.5/63% FOB Vizag | FOB Vizag {OreTeam Price Index} | 132 | 132 | 0 |
OTPX 58% FOB Goa | FOB Goa | 106 | 106 | 0 |
| | | | |
China Domestic Iron Ore | Fines, RMB wmt (avg) 66% | 870 | 870 | 0 |
China Domestic Iron Ore | Fines, RMB wmt (avg) 63% | 1030 | 1030 | 0 |
| | | | |
Indian Domestic Iron Ore | Fines, EXW 63.5/63% Orissa | 3000 | 3000 | 0 |
Indian Domestic Iron Ore | Lumps, EXW 10-30 mm 63% Orissa | 2400 | 2400 | 0 |
Indian domestic Iron Ore | Pellets, EXW Orissa | 8800 | 8800 | 0 |
| | | | |
Pb Fines Australia | 61.5% | 142 | 141 | -0.70 |
Mac Fines | | 140 | 139 | -0.71 |
Yandi Fines | 58% | 129 | 128 | -0.77 |
Brazil Fines | 64% | 152 | 151 | -0.65 |
| | | | |
SGX Iron Ore Swaps* | 62% Fe | | | |
*since closing is after 17:00 IST, the previous day closing is taken into consideration; All Values in $/ton except where mentioned |
| | 13th January 2012 | 20th January 2012 | Weekly Change % |
Steel India | Billets, Raipur (Rs/ton) | 31200 | 31200 | 0 |
| Rebar, New Delhi (Rs/ton) | 44100 | 44100 | 0 |
| HRC, Mumbai (Rs/ton) | 40000 | 39600 | -1 |
| Wire Rod, MGG (Rs/ton) | 38800 | 38800 | 0 |
| Sponge Iron, Raipur (Rs/ton) | 24600 | 23500 | -4.47 |
| Pig Iron, MGG (Rs/ton) | 32200 | 32200 | 0 |
| | | | |
China Steel | Rebar (avg) RMB/ton | 4120 | 4120 | 0 |
| Wire rod (avg) RMB/ton | 4315 | 4305 | -0.23 |
| Billet (avg) RMB/ton | 3710 | 3710 | 0 |
| HRC (avg) RMB/ton | 4385 | 4385 | 0 |
| | | | |
International Scrap | CFR WCI, HMS (1&2) | 470-480 | 470-480 | 0 |
| CFR WCI, Shredded | 485-495 | 485-495 | 0 |
| Turkey, HMS (1&2) | 465-470 | 465-470 | 0 |
| Turkey, Shredded | 475-480 | 475-480 | 0 |
| | | | |
NCDEX (Rs/ton) | Steel Long, Jan 2012 | 33700 | 33340 | 1.07 |
| Steel Long, Feb 2012 | 34130 | 33680 | 1.32 |
| Steel Long, Mar 2012 | 34330 | 33840 | 1.43 |
| | | | |
SHFE Rebar (RMB) | May 2012 | 4222 | 4315 | 2.20 |
| Oct 2012 | 4194 | 4329 | 3.21 |
| | | | |
SSEC | Mar 2012(Open) | 4264 | 4300 | 0.84 |
| | | | |
LME Billet* | Cash Buyer | 520 | 509 | -2.11 |
| Cash Seller | 525 | 511 | -2.66 |
*since closing is after 17:00 IST, the previous day closing is taken into consideration; All Values in $/ton except where mentioned |
Freight
| | 13th January 2012 | 20th January 2012 | Weekly Change % |
OTFX Superhandy Freight | ECI to China {OreTeam Freight Index} | 14 | 14 | 0 |
| WCI to China | 16 | 16 | 0 |
OTFX Panamax Freight | ECI to China | 13 | 13 | 0 |
| WCI to China | 15 | 15 | 0 |
| | | | |
Freight (Points) | Baltic Dry Index (BDI) | 1053 | 893 | -15.19 |
| Baltic Cape Index (BCI) | 1723 | 1559 | -9.51 |
| Baltic Superhandy (BSI) | 971 | 858 | -11.63 |
| | | | |
Bunker Prices Singapore | IFO 138 | 722 | 725 | 0.42 |
| IFO 190 | 736.5 | 742 | 0.75 |
| MGO 150 | 965 | 950 | -1.55 |
*since closing is after 17:00 IST, the previous day closing is taken into consideration; All Values in $/ton except where mentioned |
Equity Market
|
| 13th January 2012 | 20th January 2012 | Weekly Change % |
Sesagoa | Rs | 191.8 | 193.8 | 1.04 |
NMDC | Rs | 179.3 | 179.15 | -0.08 |
JSW | Rs | 662.5 | 673 | 1.58 |
SAIL | Rs | 95.55 | 93.15 | -2.51 |
Tata steel | Rs | 424 | 444.3 | 4.78 |
CIL | Rs | 345.5 | 352 | 1.88 |
Adani Power | Rs | 84.5 | 89.7 | 6.15 |
NTPC | Rs | 166.45 | 175.45 | 5.40 |
Reliance Power | Rs | 91.75 | 92.7 | 1.03 |
TATA power | Rs | 98.5 | 106.7 | 8.32 |
Gujarat NRE | Rs | 21.7 | 23.35 | 7.60 |
Essar Steel | Rs | 53.5 | | |
|
| | | |
|
| 65.2 | 67.53 | 3.57 |
Rio Tinto | ASD | 36.6 | 37.48 | 2.40 |
BHP Billiton | ASD | 4.75 | 5.19 | 9.26 |
Fortesue (ASX) | ASD | 26.32 | 27.48 | 4.40 |
China Shenhua Energy Comp (SHA) | RMB | 9.3 | 9.66 | 3.87 |
China Coal Energy Comp (SHA) | RMB | | | |
*since closing is after 17:00 IST, the previous day closing is taken into consideration |
World Steel Outlook Grim for 2012 - 1-21-12
After the brief write up on China and Taiwan’s steel companies plans for the coming few months, we have put together some more developments from around the world as a continuation to our earlier article.
Also, with the recent World Bank Report advising developing countries to be prepared for a global slowdown the trend has more bent downwards mainly for the countries in Europe which is already struggling to get out of its debt problems.
Starting with Europe, ArcelorMittal, the world's largest steel producer announced on Thursday that it would be extending the closure of its Sestao plant in Spain as it does not expect southern European steel demand to improve in the near future. The company had announced last October that it would halt steel production at the Sestao plant in November and December.
ArcelorMittal’s problems due to the worsening steel demand do not end here. The company also announced a prolonged closure of its long carbon steel production plant in Madrid for an indefinite period. Earlier last year it had already shut down its liquid steel production unit in Liege, Belgium on a permanent basis.
Steel demand has been seriously dented mainly due to very few new constructions and infra projects in the region and declining automobile sales. The automobile market is also is in complete disarray in Europe. Fiat, PSA Peugeot Citroën and Renault led a fourth-consecutive year of car sales declines across Europe as consumer confidence fell and unemployment remained at record levels. Registrations last year fell 1.4% to 13.6 million vehicles, propelled by a 5.8% drop in December.
From Europe to Australia where the domestic steel industry is reeling under the heavy pressure of high raw materials prices and sluggish global demand which is expected to result in continued big volumes of low-priced imports. Problem for Australia is a slow growth in demand and a very unstable appetite for steel in the domestic market which doesn’t allow its steel mills to get an advantage over the imported steel products from countries like China which are offering nearly 5-10% discounted rates.
Moving towards Korea, there is a lot of bad news for the biggest steel producer POSCO. Hyundai Heavy Industries Co., Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co. , namely the largest consumers of steel plates produced by Posco have projected a cut of atleast 12% in their steel purchase this year. Surely, Posco’s pricing will be hurt in the process. The falling ship building orders has had the biggest demand cut for steel in this area. Oversupply looms now as the production capacities built earlier had enough to cater a demand equivalent to 125% of the prevailing requirement.
Korea’s neighbor Japan is also facing some strong automobile demand contraction in the market. The demand for cars, trucks and buses in Japan may grow just 1% this year to 5 million vehicles from 4.2 million last year, shying from the projected 900,000 vehicle additions for 2012. After the deadly earthquake and Tsunami last year, Japan’s auto sales fell by almost 15%. This year the country has plans to introduce 3 new high speed train lines and continue on a full scale rebuilding of the destroyed buildings and paused projects.
So, is the condition bad everywhere on the globe? The answer is no. Few countries namely India, US, Brazil and parts of Middle East as of date are still eyeing some good demand possibilities for steel and steel products.
Energy, bridge work and infrastructure projects, such as dams, as well as some shipyard and marine work are taking shape in USA after a temporary halt. Either we may call pre-election movement in these sectors or a real demand, the contribution of these projects is improving the outlook for plate use on the West Coast. Prices have strengthened and there is a good domestic demand already in place which has already thinned down the exports.
Raw steel production in Indiana and the Chicago area was 501,000 tons in the last week where as production in the Southern District which is also nation's largest steel-producing region, was estimated at 645,000 tons. The domestic mills steel production was up by 5.3% last week, as compared to the same period in 2011 recording nearly 2 million tons. The last indicator of the growing demand being the total steel production till date in 2012 which has already touched 3.8 million tons as compared to 3.6 million in the same period last year. Following the good demand in the domestic market, the export prices of ferrous scrap have not yet been discounted by the exporters.
In India, lot of capacity is going to be added up in the next few years. Steel capacity is projected to be around 200 million tons by 2020. Current demand is growing very slowly mainly due to liquidity issues but the overall growth remains positive for the country. The GDP base is good and the projection of nearly 6% increase is visible in the country’s steel sector. The main drivers being the infra projects, railways and new constructions.
Overall, the world steel outlook is partially weak for the near term but the long term might change slightly. For countries like Japan and Korea which are mostly ship building based will have tougher times with reduced orders.
China might slow down due to numerous countries and their demands. China is a net exporter and with the export market slowing down, now has to cope with the excess steel which might be left in the domestic market. The second option for China will be to cut down some of its production like Europe.
Europe will battle it’s over capacity in 2012 as well and with just about 1% consumption growth seen in this year, it will have a tough time ahead. Globally the overcapacity problem will shadow the steel sector. Countries like India which are net importers of steel can easily negotiate some good import prices and those exporting will have to look for alternate markets.
Market this morning: 1-20-12
· Last official business day in China before holidays. Trade is thin in the physical market but good pick up seen in the paper segment.
· Spot prices remain unchanged with a fairly stable note for post-vacation opening. Not much of an enthusiasm left for the post-vacation season.
· Ore price index remains unchanged today at $132/t FOB Vizag for Fe 63.5/63% fines and at $106 FOB Goa for Fe 58% fines.
· The 2012 post vacation scenario is not likely to be the same as earlier years mainly due to the uneven steel market demand and growth projected for the year. Also the supply disruptions are not so bad as last year and some mills have cut down production. The entire global economic picture is different for 2012 as compared to 2009, 2010 or even 2011.
Ø The HSBC flash manufacturing purchasing managers index (PMI), the earliest indicator of China's industrial activity, stood at 48.8 in January, a three-month high and a slight improvement on the 48.7 final reading of the December index.
Ø The consecutive below-50 reading of the manufacturing PMI in the last 3 months gives an indication that China has to do more to improve its industrial growth. Either more liquidity easing or softening its policies are required to help the industry grow in the coming months.
· In India, domestic scrap prices rallied nicely last evening with a gain of nearly Rs1000 per ton. This morning as well the opening trade has been good mainly in Mandi Gobindgarh which is the hub of Indian steel and scrap in the northern part of the country. Following a recent hike in the steel prices from this area by nearly Rs500-800 per ton which included ingots reaching Rs34,500-34,600 per ton the scrap sellers have also started to push their prices up. The imported market is already quite tight following the appreciation in the rupee which is not allowing many importers to purchase at the prevailing rates. The sponge iron prices in this area have also moved up to Rs28,600 which leaves a margin of just about Rs6000 per ton between DRI and ingots. The prices of sponge iron and scrap, which are basic raw material for Punjab-based steel producers have increased in the range of Rs 800-1000 per ton in the last 3 weeks but on a stable note which is putting pressure on the steel producers to push their prices. Punjab - a major producer of steel - has almost 200 induction furnaces and four arc furnaces spread across Mandi Gobindgarh, Ludhiana and Khanna consumes almost 10,000 tons of scrap and sponge iron per day for producing ingot in order to meet requirement of bicycle industry, auto parts, hand tools, fasteners and particularly construction industry.
· Moving towards the eastern belt, NMDC ore supplies are still disrupted for more than a week now due to the local protestors forcing still adamant with their demand for a better rail network in the region. Railways is in no hurry to supply its rakes to this region which could lead to a mass destruction of property and business of both railways and NMDC. On the other hand now NMDC may be preparing to cut down production as their fines deposits are increasing on a daily basis. Government intervention may be the only solution to this issue.
· Down South, the problems are worse. The domestic scrap availability in Andhra Pradesh and Tamil Nadu is very tight and prices are moving up as the sellers have increased their offers by nearly Rs500-1000 per ton only due to the hike in the prices in the north. The sellers are also now focusing on the north-Indian markets to sell their scrap as the number of working units left in south has reduced by a large number in the last few months. The DRI prices in Hyderabad and Chennai have remained stable for more than 2-3 weeks now and the movement has also been very slow which is not in the favor of the local scrap sellers who are working on very small margins.
· Ship demolishing business at WCI (mainly Alang) has picked up since the beginning of 2012 as compared to H2’11. More than 23 vessels have reached or booked for demolishing with the oldest vessel being 1973 built and latest in the series being 1987 built. With the new delivering making way into the international waters burdening the freight rates, vessel owners are actually looking towards scraping their old vessels, the decision which they used to normally delay when iron ore exports were on full bloom.
Paper Market:
· SHFE rebar trade has been moving up since morning. The trades have been good and the prices are scaling up since early morning. Although the traded volumes are low, the optimism is that the post vacation market might move up and investors can book profits around the end-Jan or mid-Feb sessions. Most traded May’12 rebar is trading at 4334 yuan this morning.
· SSEC is also up this morning. With the news of export prices of plates moving up and PMI figures not going down much (rather not contracting further), a slightly better mindset has come into picture. Optimism is same like SHFE but the actual positivity is still missing. Mar’12 contract was the biggest gainer with 13 yuan this morning.
· After the IMF’s positive outlook towards the European crisis, the metals had a good day at LME. A technical buyout was visible in the market yesterday. The short term view is quite inviting right now for the market but long term the eurozone worries will shadow back. Irony of the LME being the steel billets which had a different picture to post. The cash buyer/seller was down by nearly 3% both ways.
· NCDEX had a good opening with all future steel long contracts up nearly Rs100 with an exception of Feb’12 contract which has narrowed down by Rs40 per ton.
· SGX gains in the 62% Fe swaps have also narrowed down. The market is not seeing much of a trade these days which is impacting the trade at the exchange. The Q1’12 gained nearly 0.09% where as calculated Q2’12 gained 0.55% respectively.
Equity Market:
· Asian stock markets rose Friday as strong earnings and positive jobs data out of the U.S. added to hopes that the economic recovery in the world’s largest economy is for real.
· On the last trading day before Chinese New Year holidays begin Monday, Hong Kong’s Hang Seng added 0.3 percent to 19,992.55. Japan’s Nikkei 225 index rose 1.4 percent to 8,761.30 and South Korea’s Kospi gained 1.2 percent to 1,937.63.
· Mining giant Rio Tinto Ltd. rose 0.8 percent. Fortescue Metals Group, Australia’s third-biggest iron ore producer, gained 1.2 percent.
· SAIL was up this morning in India by 0.55%, Tata Steel 1.31%, NMDC 1.31% and Sesagoa 0.82%. JSW steel however was down -1.47% in the early trade.
Market @ Mid-day: 1-19-12
· Spot iron ore market remains quiet with one odd transactions being reported towards the day end.
· Buyers and traders in China are already on vacations and the holiday mood is not favoring much trade.
· Indian steel market was seen in the revival mood this morning. Steel billets and ingots were seen moving up by Rs 200 per ton.
· Steel long as usual are keeping steady in the domestic market. Rebar sales are still low giving no respite to the buyers or sellers.
· Rupee is appreciating once again as foreign investments flow in more easily and heavily. Exports of iron ore likely to turn more expensive in this manner.
· US steel prices still unchanged. $5-10 per ton increase was visible through last few weeks but now the prices have stagnated again.
· China steel prices are similarly unchanged, even this afternoon there was not a big movement seen in the markets. Rebar and billets were fluctuating in a marginal range of 10-15 yuan per ton.
Paper Markets:
· SHFE rebar trailing this morning. The contracts are squeezing as the trade has gone silent and the number of participants actively involved are also not showing much interest. Most traded May’12 contract was down by nearly RMB 10 while others were down by 15-20 yuan.
· SSEC is doing fairly better than SHFE as the contracts are looking up but sentiment wise it is the same phenomenon visible in both the exchanges. A bearish sentiment is visible going ahead atleast till vacations.
· Steel long contracts at NCDEX is down by nearly Rs 200 per ton. Jan’12 contract is down Rs 190 at Rs32600 per ton and Apr’12 is down by Rs 200 at Rs33360 per ton.
· LME remained mostly unchanged mainly due to the holiday break on the eastern side and the weak economic situation in the continent not allowing the investors to take up big positions.
1-18-12
Iron Ore This Morning:
· Few offers were heard in the market during closing last evening which included Indian 54% Fe fines and 58% Fe fines from WCI in 50,000 dmt lots at nearly $105 and $125 per ton CFR China respectively. The buying interest is very low and these deals may not concluded till China returns from the vacations.
· Ore Price Index opened unchanged today for Fe 63.5/63% fines at $132/t FOB Vizag and Fe 58% fines at $106 FOB Goa.
· BHP concluded Newman iron ore fines at $143.5 per ton CFR, lower than the previous deal at $145.5 per ton CFR. Yandi fines were concluded at $127.8 per ton CFR versus $128.5 per ton traded earlier.
· The absence of buyers in the market is not giving much hopes to the sellers and the prices floating higher than expected at this point of time are giving a hard time to the mills who are not able to sell their end steel products easily in the market.
· The profit margin of the Chinese steel industry hit a record low in November. CISA's 256 member enterprises posted a combined profit of 1.22 billion yuan after offsetting losses, down by 180 million yuan from October. Their average sales margin reduced from 0.48 percent to 0.43 percent, at 2.55 percent, well below the average profitability of the country's all large-scale industries.
· Iron ore, coking coal and scrap prices continued to drive up the production cost of steelmakers. China imported 622.01 million tons of iron ore from January to November last year at an average price of $166.21 a ton including freight, an increase of 31.49 percent by value from the same period last year. This has led to an increase in payments of $24.76 billion yuan.
· Meanwhile, China's industrial value-added output growth decelerated in 2011 from a year earlier to 13.9 percent year-on-year. In December, the industrial value-added output was up 12.8 percent from a year earlier. On a monthly basis, industrial value-added output increased by 1.1 percent. Industrial value-added output measures the final output value of industrial production, or the value of gross industrial output minus intermediate input, such as raw materials and labor costs.
· China’s December crude steel output touched 52.16 million tons taking the total production of crude steel in the country to nearly 684 million tons, up by 9% as compared to year earlier.
· Global miner Rio Tinto achieved a record global iron ore production of 65 million tons in the three months to December, bringing full year output to 245 million. Nearly 5 million more than the forecasted 240 million tons.
· ArcelorMittal Brazil to hike iron ore production 65% by 2013.
Paper Trade:
· SGX iron ore markets is moving quite swiftly although the physical market has already taken a break. The probability of a good season for iron ore and steel in mid-Feb’12 and Mar’12 once China comes back into buying is keeping the morale up for the investors in the paper trade. The calculated Q1’12 contract was up by 0.36% at $123.777 where as Q2’12 was down -0.14% to $119.75. Definitely the view in the paper market is also for a short term and long term looks quite unsteady.
· Shanghai (SHFE) rebar contracts which closed with marginally good gains last evening has started the morning today with some dull sentiment. The buying is still slow and like normal days the trade is likely to pick up by closing only. Till now, majority contracts are up by 7-10 yuan with the most traded May’12 trading at 4287 yuan against an opening of 4281 yuan.
· SSEC is also up nicely this morning. The most traded Mar’12 contract has gained nearly 20 yuan trading at 4292 yuan. There is a likely possibility in the market that the domestic steel prices might move by this evening giving some relief to the steel traders. The same sentiment is visible in the steel exchange as well where the forward steel contracts are rising with modest gains.
· NCDEX steel long contracts in India had another bad day yesterday. The Jan’12 contract lost nearly 2.54% to close at Rs31,800 per ton where as Feb’12 and Mar’12 contracts have lost -1.55% each. This morning the losses at the exchange have been subdued and the marginal Rs20-50 per ton downside was visible which might get adjusted by closing.
· At LME, the overnight impact of the burden on the billets due to the eurozone instability worries eased a little. Big gains were not visible but cash buyer/seller settled nearly 0.96%/1.96% to close at $525/530 respectively. But the 3 months cash buyer fell -3.53% to $520 acknowledging the fact that the steel industry hasn’t yet completely got a break of the crisis and investors are not completely confident of the future growth. The physical steel market in EU is still soft and steel prices are not gaining as much as the prices in US. The gap between the EU and US steel prices in increasing on daily basis now.
Equity Market:
· Asian stock markets were mixed this morning as uneven earnings reported from big U.S. banks dampened investor enthusiasm over successful bond issues in Europe.
· The benchmark BSE Sensex rose by nearly 44 points in early trade today. The 30-share index, which has gained over 428 points in the past three sessions, rose further by 43.93 points, or 0.26%, to 16,509.98 points.
· SAIL is down -1.6% this morning at 10.47am along with NMDC up by 0.5%. JSW up by -0.42% and Tata Steel at -1.80%.
· In Australia, Rio is up 1.18% where as BHP Billiton after its results is up at 0.45%.
· Japan's Nikkei 225 index rose 0.2 percent to 8,480.99 and Hong Kong's Hang Seng added 0.4 percent to 19,696.35. But South Korea's Kospi fell 0.2 percent to 1,888.71 and Australia's S&P/ASX 200 was flat at 4,215.30.
· Euro rose to $1.2779 from $1.2722 late Tuesday in New York. The dollar fell to 76.68 yen from 76.82 yen.
Steel:
· The steel market in India is also looking down this morning but the correction is not is as big as seen yesterday. Ingots are down by nearly Rs400 per ton where as Billets have maintained a steady ground.
· Rourkela Steel Plant closes two units after pollution board order.
Ferrous Scrap:
· Russia bans scrap export from Far East to allow domestic steel production from 13 February 2012. It was learned that the Russian prime minister Vladirim Putin had signed an order to ban the scrap export from the Russian Far East lately. The PM has ordered to close all Russian Far Eastern ports form where the exports take place, except Magadan, which is currently frozen.
· East Asian ferrous scrap import market glooms
Rate | Spec | Region | Rate | Spec | Region |
Rebar (12mm) | 44300 | (Rs/t) MRP | Delhi | 623-624 | ($/t) MRP | Shanghai |
Billet | 35600 | (Rs/t) EXW | MGG | 561-562 | ($/t) MRP | Tangshan |
Wire Rod | 35600 | (Rs/t) EXW | Raipur | 652-653 | ($/t) MRP | Shanghai |
HRC | 42500 | (Rs/t) EXW | MGG | 664-665 | ($/t) MRP | Shanghai |
CRC (0.5mm) | 43200 | (Rs/t) EXW | Mumbai | 805-807 | ($/t) MRP | Shanghai |
Pig Iron | 27500 | (Rs/t) EXW | Raipur | 516-518 | ($/t) MRP | Tangshan |
Scrap (HMS 1&2) | 470-480 | ($/t) EXW | Nhava Sheva | 460-465 | ($/t) CIF | Main Port |
Scrap (Shredded) | 485-495 | ($/t) EXW | Nhava Sheva | 475-480 | ($/t) CIF | Main Port |
HMS 1 | 475-480 | ($/t) CIF | Mumbai |
HMS 2 | 465-470 | ($/t) CIF | Mumbai |
Sponge Iron | 22500 | (Rs/t) EXW | Bellary |
Sponge Iron | 23500 | (Rs/t) EXW | Raipur |
Cast Iron | 29300 | (Rs/t) EXW | MGG |
MS Ingot | 34350 | (Rs/t) EXW | MGG |
LC Ingot | 35600 | (Rs/t) EXW | MGG |
Coal (6300 kcal/kg) | 115.00 | ($/t) FOB | Australia |
Coal (5900 kcal/kg) | 97.00 | ($/t) FOB | Indonesia |
Coal (6000 kcal/kg) | 105.50 | ($/t) FOB | South Africa |
HCC (Mid-Vol) | 196-198 | ($/t) FOB | Australia |
Market This Morning 1-17-12
· Not much left to describe in the spot trade as things are not moving as briskly as earlier. A blanket of silence is covering the trade as traders and mills move out of the market for vacations.
· OreTeam Price Index for Indian iron ore remained unchanged on Monday after slipping by $1 per ton week closing Friday (13-Jan).
· The number of transactions heard in the market were almost nil and the cargoes under offer are also very few.
· China GDP grew 8.9% in Q4 slightly better than the forecasted 8.7% which indicates the state of the industry in the country is not that bad and a little help may support its upward momentum. RRR rates revision may be delayed now but interest rate cuts will definitely be postponed.
· China produced 71.07 million tons of steel products in Dec’11, up 6% yoy. Total output for 2011 stood at 881.2 million tons, up 10.7% from 2010.
· Now, focus shifts towards the post-holiday market in China which is likely to see some movement in the market. But comparing with last year, even the post-vacation market has not seen a sharp hike in either demand or prices.
· Rio Tinto announced record global iron ore shipments of 239 million tons in 2011 were below production due to extreme weather conditions experienced in the first half of the year. Despite this, Rio Tinto’s Pilbara ports operated at above annualized capacity rates and shipped record volumes of 61 million tons in the fourth quarter and 225 million tons for the full year.
· Record global iron ore production of 65 million tons was achieved in the quarter (51 million tons attributable) and 245 million tons for the full year (192 million tons attributable) by Rio Tinto.
· FORTESCUE Metals Group shipped 14.8 million tons of iron ore during the final three months of last year, up 19 per cent on the previous quarter. The company achieved an annualized run rate of 59 million tons a year.
Trade Feels:
· Till there is any increase in the prices of steel, the demand wouldn’t move up and we wouldn’t be able to purchase more raw material. We already have enough ore to go for 45-50 days and if the demand does not improve in this period then we have to cut down production. The vacations have come as a break for us to allow the markets to stabilize and we hope to see a brighter start on the other side of the holidays.
· With the steel mills not inclined to hike their prices for Feb’12 and some others already rolling the same prices for Mar’12, it is very unlikely a big change will be visible towards mid-Feb. Any buying may only be visible towards the middle or end of Feb’12.
· Domestic iron ore prices in China moved up by 20-30 RMB yesterday but the move is more regional as the other mines might have closed down during the seasonal break. Once the winters will recede, the mines will come back into action putting pressure on the domestic ore prices as well.
Ore Price Indices:
· Ore Price Index for Indian Iron ore (OTPX)
o 63.5/63% Fe fines - $132 per ton FOB Vizag
o 58% Fe fines - $106 per ton FOB Goa
o 54% Fe fines- $86 per ton FOB Goa
o 52% Fe fines- $77 per ton FOB Goa
o 50% Fe fines- $66 per ton FOB Goa
· Ore Freight Index for Superhandy & Panamax Freight on India- China Route(OTFX)
o Superhandy
§ ECI – China : $14 per wmt
§ WCI - China : $16 per wmt
§ Dual Port ECI – China: $14-15 per wmt
o Panamax
§ ECI – China : $13 per wmt
§ WCI - China : $15 per wmt
§ Dual Port ECI – China: $13-14 per wmt
Paper Markets:
· At SGX iron ore 62% Fe swaps trade, the momentum marched up with calculated Q1’12 contract rising by 0.48% to close at $123.33 and Q2’12 closing up by 0.65% at $119.917. The market participants still feeling that modest gains are yet to seen in this week and the extent of growth in USA due to its recent economic data might support the cause of the iron ore prices in the short term. The trade although remains volatile but for the time being the gamble is working for the participants.
· SHFE rebar contracts in China are fluctuating amidst the dropping sentiment in the steel market but the curiosity of the traders because of the recent GDP numbers which have given some hopes to the investors has allowed some positive movement early this morning. Probably the rally is going to be short-lived as the holiday mood will soon envelope majority trade. Yesterday the futures moved up more than 1 percent to their highest in three months.
· SSEC is also active this morning mainly due to the same reasons as prevailing in SHFE rebar but the gains are higher as compared to SHFE. The most traded Mar’12 contract has gained 10 yuan to trade around 4273 yuan. May’12 contract gained a high of 23 yuan this morning to remain at 4294 yuan.
· LME had been very slow through the week opening day. The trade remained quite slow and the pessimistic attitude of the investors is burdening the market. LME cash buyer/seller contracts fell by nearly 0.0%/-0.95% to $520/520 respectively. The trade is likely to remain slow as the Europe data and the economic conditions are not supporting the metals trade.
· Indian NCDEX steel long also fell last evening as hopes of any hike in the steel prices in the physical market were virtually killed due to the slow growth in demand and the elections coming up. All contracts for steel long fell by more than 1.5% yesterday evening at NCDEX. On the contrary this morning, the May’12 contract started the trade with a hike of Rs1150 per ton to touch Rs34,650 per ton which is the highest price seen after 7-Jan, 2012.
Equity Markets:
· China GDP figures have helped the Asian and Indian markets to move up this morning. The better than expected results have allowed the markets to inch up early this morning.
· Japan's Nikkei Stock Average rose 0.6%, Australia's S&P/ASX 200 advanced 1.3%, Hong Kong's Hang Seng Index advanced 1.5%, South Korea's Kospi Composite climbed 1.4% while China's Shanghai Composite was up 0.3%.
· The Bombay Stock Exchange benchmark Sensex rose by 198 points in early trade on Tuesday on sustained buying by funds and retail investors, buoyed by easing inflation and a firming trend on other Asian bourses.
· The 30-share BSE index, which gained almost 152 points in the previous two sessions, rallied further by 198.14 points, or 1.22 per cent, to 16,387.50, with all sectoral indices, led by auto and capital goods, trading in the positive zone.
· SAIL is up by 1.91% this morning along with Tata Steel Ltd up 2.63%, NMDC by 1.90% and JSW Steel moves up by 1.95% this morning.
Iron Trade Trade This Morning: 1-16-12 · Monday morning started with very few inquiries but the actual interest is very low. The buyers are now slowly moving away from the markets as the holiday season is approaching.
· The number of cargoes being held by the traders in China is comparatively higher than the inquiries coming in.
· The few last minute buyers are still finding the prices high and are negotiating hard to acquire the last minute cargoes.
· Cargoes from Brazil are delayed allowing the Australian cargoes to gain advantage but Indian material is left with no support.
· A very quite start in the market this morning.
Trade Feels:
· We are not planning to buy any fresh material today. We will wait till Friday as the prices might come down further like in the last week.
· We are trying to sell some cargoes to the smaller mills who had shown interest last week but now even they are backing out.
· The only possibility to sell some material is if the steel prices move up. There is an expectation in the market that the steel prices might move up after Mar’12 and some liquidity easing steps might also be introduced by China, hence mills will wait for the announcement before going for any fresh intake.
· Production cuts are visible in many places, liquidity is tight and iron ore prices are still sailing very high, it is very difficult to sell cargoes in this market.
Paper Market:
· SHFE rebar had a silent opening. The trade has been very low and the volumes seen till now indicate the holiday mood setting in. The most traded May’12 contract has already seen lows of 4202 yuan after opening at 4222 yuan this morning. The trend is bearish now as the interest levels are dented with no hopes of an immediate hike in the steel prices to support the paper trade.
· SSEC has also been on the lower range this morning. All the contracts have lost marginally but the sentiment again seems to be holding quite loose. The spread of the last few trading sessions indicate that the demand is a concern for the market which is not allowing any big gains. Mar’12 contract has lost nearly 4 yuan since morning but the volumes have been very low. Further pick up is not expected.
· At Indian NCDEX, the steel long market is facing a tight situation. After losing in three straight session the Jan’12 contract retained 0.18% on Saturday closing which is on the verge of slipping again this morning. The Jan’12 contract started the day at Rs33,190 per ton and has till now slipped by nearly Rs200 per ton. Further loses are possible as the equity market is contained in a bearish tone after the eurozone fears.
· SGX iron ore 62% Fe swaps gained on Friday closing with an anticipation that the last week before Chinese vacations might see some positive movement in the market. The movement is yet to be traversed but the calculated Q1’12 contract moved up 0.3% to close at $122.75 but the Q2’12 contract slipped by -0.95% to close at $119.14.
· LME is again under daunted by the fears of the eurozone debt problems. Towards closing last week the euro fell on poor Italian bond sale and not many investors were seen showing much interest in the trade. Cash buyer/seller contract was down -1.70%/-1.13% respectively to close at $520/$525 on Friday evening.
Equity Market:
· The Bombay Stock Exchange's Sensex opened in the red after the S&P downgraded nine Euro zone nations.
· Other Asian stock markets are mostly trading notably lower on Monday with investors pressing sales amid renewed worries about the European economy.
· The benchmark S&P/ASX 200 index, which declined to 4,138.5, is currently down 45.6 points or 1.1 percent at 4,150.3.
· BHP Billiton is down 1.3 percent, Rio Tinto is trading 0.8 percent down and Newcrest Mining is losing about 1.2 percent, while Fortescue Metals is down 2.3 percent.
· In India, SAIL is down -1.89%, JSW Steel -1.48%, NMDC -1.54% and Sesagoa -2.41%.
Imported Scrap prices as on date: 1-16-2012
Country | Grade | 13-01-2012
($/MT) | Change
($/MT) | Delivery | Place |
DUBAI | HMS I & II | 460 | | FOB | NHAVA SHEVA |
EUROPE, UK, USA | SHREDDED | 475 | | CFR | NHAVA SHEVA |
EUROPE | HMS I & II (80:20) | 460-465 | | CFR | NHAVA SHEVA |
IVORY COAST, AFRICA | HMS I & II | 450 | | CFR | CHENNAI |
TURKEY IMPORT | HMS(80:20) | 465-470 | | CFR | TURKEY MAJOR PORTS |
TURKEY IMPORT | HMS(70:30) | 440 | | CFR | TURKEY MAJOR PORTS |
TURKEY IMPORT | SHREDDED | 475-480 | | CFR | TURKEY MAJOR PORTS |
EUROPE EXPORT | HMS(70:30) | 420 | | FOB | ROTTERDAM |
EUROPE EXPORT | SHREDDED | 445-450 | | FOB | ROTTERDAM |
EUROPE EXPORT | HMS(80:20) | 435 | | FOB | ROTTERDAM |
DUBAI | HMS I & II | 455 | | CFR | KANDLA |
EUROPE | HMS (80:20) | 455-460 | | CFR | CHENNAI |
UK, EUROPE | SHREDDED | 465 | | CFR | CHENNAI |
US EXPORT | HMS(80:20) | 435-440 | | FOB | US EAST COAST |
Weekly Trade Update: {Projection for the coming week inserted at the bottom}
1-16-12
Iron Ore
· Ore Price Index dropped $1 per ton this evening to close at $132 per ton FOB Vizag for 63.5/63% Fe fines & $106 per ton FOB Goa for 58% Fe fines.
· After 19th December 2011, this is the first fall witnessed in the OreTeam Price Index.
· The buying levels were also seen cut down through the day as most of offers were prevailing quite high in comparison to the buyer’s expectations.
· There was very room to negotiate for either the buyers or sellers in the market today which lead to very limited transactions in the market. Overall, the weakest day of the week after yesterday’s good trade.
· Buyers are planning not to purchase heavy cargoes and are trying to grab the last left material at discounts where as sellers are trying to push the prices up to gather last minute peaks.
· Getting the necessary paper work towards the holidays is getting tough for the mills and buyers in China, hence either they have to buy from the port stockpiles.
· Lower grades from India are holding the fort for the Indian sellers
· The discussion are still on in the market for the following cargoes –
o 63.5/63% Fe fines earlier being quoted at $151-152 per ton from India now dropped to $147-149 per ton levels.
o 54% Fe fines at $106 per ton CFR for a panamax vessel
o Two cape shipments of Brazil 64% Fe fines & 63.5% Fe fines at $150 per ton and $146 per ton respectively.
o A Canadian cargo with 64% Fe pellets at $171-172 per ton CFR
· Through the week, Ore Price Index gained $2 per ton on FOB India basis between 9-13 January 2012.
· The gains have been mainly due to the result of ex-Indian cargoes landing into China allowing the buyers to pick up material before Lunar New Year vacations.
· Indian cargoes have been quite low and mostly from the west coast. The east coast domestic movement restrictions and duty hike are not leaving any margins for the traders, virtually killing the exports.
· SGX Iron ore 62% Fe swaps had a mixed week. The calculated Q1’12 contract started the journey on 6th Jan at $123.36, moved up to $124.12 on 10th Jan and then slipped back to $122.38 on Thursday evening. The expectations of some weakness in the physical steel and iron ore prices is keeping the sentiment down in the paper market as well.
| | 6th January 2012 | 13th January 2012 | Weekly Change % |
OTP | 6th January 2012 | 13th January 2012 | Weekly Change % |
X 63.5/63% FOB Vizag | FOB Vizag {OreTeam Price Index} | 131 | 132 | 0.76 |
OTPX 58% FOB Goa | FOB Goa | 106 | 106 | 0 |
| |
|
|
|
China Domestic Iron Ore | Fines, RMB wmt (avg) 66% | 870 | 870 | 0 |
China Domestic Iron Ore | Fines, RMB wmt (avg) 63% | 1030 | 1030 | 0 |
| |
|
|
|
Indian Domestic Iron Ore | Fines, EXW 63.5/63% Orissa, (Rs/ton) | 2800 | 3000 | 7.14 |
Indian Domestic Iron Ore | Lumps, EXW 10-30 mm 63% Orissa (Rs/t) | 2200 | 2400 | 9.09 |
Indian domestic Iron Ore | Pellets, EXW Orissa (Rs/ton) | 8600 | 8800 | 2.32 |
| |
|
|
|
Pb Fines Australia | 61.5% | 140 | 142 | 1.42 |
Mac Fines | 61% | 138 | 140 | 1.44 |
Yandi Fines | 58% | 127 | 129 | 1.57 |
Brazil Fines | 64% | 150 | 152 | 1.33 |
| |
|
|
|
SGX Iron Ore Swaps* | 62% Fe, Calculated Q1’12 | 123.36 | 122.38 | -0.79 |
| 62% Fe, Calculated Q2’12 | 119.64 | 120.29 | 0.54 |
*since closing is after 17:00 IST, the previous day closing is taken into consideration; All Values in $/ton except where mentioned |
Steel
· Meanwhile, through the week the Chinese steel prices have lost nearly $15-18 per ton which is not a good indicator for the raw material market. Most of the fall has been witnessed in the rebar prices and then followed into wire rod.
· Majority steel mills in China have held onto their January prices for February and are also heard to be offering discounts for Feb-deliveries on one-to-one basis. The sentiment for the coming months or atleast the first quarter in China & India looks dulls and slightly downwards which is not allowing any steel mills to hike their prices.
· Indian domestic steel market staged a steady movement through the week. There wasn’t much a movement in either direction witnessed at the market mainly owning to the uncertain steel demand. The IIP numbers, inflation and the projected growth of the industry sector in India didn’t help in reviving the sentiments of the invertors.
· SHFE had a very decent week filled with some good gains in the mid week, loss on the first day and then a gradual stability towards closing. The most traded May’12 contract started the week with a 10 yuan fall from the week before but gained 44 yuan to touch 4222 this afternoon, the highest for the week. The move has been stable there after. The sentiment is very cold in the paper market as the holidays as nearing and investors are planning to put off their new purchasing plans for the season.
· At SSEC, the trend has been fluctuating since the start of the year. After the expiry of the Jan’12 contract, the other contracts have been very volatile with modest gains visible on daily basis. On 3rd Jan, SSEC Feb’12 contract settled at 4241 yuan which has ended this week at 4239 yuan. The contract was trading at 4228 yuan on 30th Dec 2011. The flat products demand and prices has been constant leading to this modest movement in the prices. The year started with a good sentiment but then lost the momentum.
· NCDEX steel trade started the week gaining nearly Rs130 per ton on Monday (9th Jan) and touched highs of Rs34,180 before sliding back to Rs33,500, down by almost Rs300 to the closing levels of last week. The scenario is similar to that of China in India, with uncertainty looming the steel demand along with the seasons factors coming into play.
· LME Billet market is also under immense pressure due to the eurozone issues. The steel billets were moving in a different direction as to the other metals being traded at the exchange which lead to the short rally in the billets through the first few days of the new year. Ever since, the prices have broken their strength and scaled down slipping $2-5 per day. Steel billets cash buyer contract gained nearly $15 through the week and lost $5 to close Thursday evening at $529 after hitting a peak of $534. Same was the scenario with the cash seller contract.
Scrap
· Offers for scrap from US have moved up for the Indian buyers but the fluctuating rupee didn’t help many traders as rupee stayed above 52.5/53 against the dollar. The domestic steel demand is also growing slowly adding to the worries of the importers. The fact that the sponge iron prices had a speculative increase in this week on the back of a rumor that NMDC and other prices would hike their prices has lead to an improvement in the scrap demand.
· Some traders in India have reported to have got offers for shredded material from USA at nearly $500 per ton CFR for bulk scrap and $477 per ton for HMS 1&2. The hike in the offers is heard on the back of limited scrap inventory at the US ports and a good demand holding in Turkey which is not allowing the importers in India to negotiate hard. But Turkish importers may be gaining some discounts as their end product i.e. rebar is gaining a good price in the US market and is likely to move up quite quickly in the coming weeks. The increase in the scrap prices to Turkey are giving the rebar prices to climb up.
· US container HMS 80:20 (1&2) to steel mills in southern Taiwan were at US$458-460/ton C&F whereas the same into Korea were at $438-440 per ton C&F.
· Also heard today is a US HMS 1&2 80:20, 45000 tons cargo concluded this week at $472.5 per ton CFR to a large trader in Turkey. As compared to the week before the price is at a discount of $2 per ton.
· With Chinese & Taiwanese buyers staying away from the market in the coming days, the offers are likely to see some drop. Already the discussions in the scrap market for US scrap are seeing $2-3 per ton discounts for end-Jan, early-Feb deliveries.
| | 6th January 2012 | 13th January 2012 | Weekly Change % |
Steel India | Billets, Raipur (Rs/ton) | 31200 | 31200 | 0 |
| Rebar, New Delhi (Rs/ton) | 44300 | 44800 | 1 |
| HRC, Mumbai (Rs/ton) | 42400 | 42400 | 0 |
| Wire Rod, MGG (Rs/ton) | 38800 | 38800 | 0 |
| Sponge Iron, Raipur (Rs/ton) | 23500 | 24500 | 4.68 |
| Pig Iron, MGG (Rs/ton) | 31400 | 31400 | 0 |
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China Steel | Rebar (avg) RMB/ton | 4160 | 4120 | -0.96 |
| Wire rod (avg) RMB/ton | 4335 | 4315 | -0.48 |
| Billet (avg) RMB/ton | 3710 | 3710 | 0 |
| HRC (avg) RMB/ton | 4385 | 4385 | 0 |
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International Scrap | CFR WCI, HMS (1&2) | 470-480 | 470-480 | 0 |
| CFR WCI, Shredded | 185-495 | 485-495 | 0 |
| Turkey, HMS (1&2) | 465-475 | 465-475 | 0 |
| Turkey, Shredded | 480-490 | 480-490 | 0 |
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NCDEX (Rs/ton) | Steel Long, Jan 2012, Settlement | 33600 | 33500 | -0.30 |
| Steel Long, Feb 2012, Settlement | 33700 | 34110 | 1.22 |
| Steel Long, Mar 2012, Settlement | 34040 | 34220 | 0.53 |
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SHFE Rebar (RMB) | May 2012 | 4181 | 4222 | 0.98 |
| Oct 2012 | 4166 | 4194 | 0.67 |
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SSEC | Mar 2012, Settlement | 4250 | 4266 | 0.38 |
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LME Billet* | Cash Buyer | 519 | 529 | 1.92 |
| Cash Seller | 521 | 531 | 1.91 |
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MCX | Iron ore 62% Fe, FOB Vizag (Rs/ton) | 6545 | 6403 | -2.17 |
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Rupee Against Dollar | | 52.7838 | 51.4310 | -2.56 |
*since closing is after 17:00 IST, the previous day closing is taken into consideration; All Values in $/ton except where mentioned |
Freight
| | 6th January 2012 | 13th January 2012 | Weekly Change % |
OTFX Superhandy Freight | ECI to China {OreTeam Freight Index} | 14 | 14 | 0 |
| WCI to China | 15 | 16 | 6.66 |
OTFX Panamax Freight | ECI to China | 13 | 13 | 0 |
| WCI to China | 14 | 15 | 7.14 |
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Freight (Points) | Baltic Dry Index (BDI) | 1347 | 1105 | -17.96 |
| Baltic Cape Index (BCI) | 2304 | 1798 | -21.96 |
| Baltic Panamax Index (BPI) | 1537 | 1338 | -12.94 |
| Baltic Superhandy (BSI) | 1112 | 999 | -10.16 |
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Bunker Prices Singapore | IFO 380 | 716 | 722 | 0.84 |
| IFO 180 | 729 | 736.5 | 1.03 |
| MGO | 960 | 965 | 0.52 |
*since closing is after 17:00 IST, the previous day closing is taken into consideration; All Values in $/ton except where mentioned |
Equity Market:
· Indian shares closed high as improved risk sentiment sent Asian and European bourses higher. Asian stocks rose, with a regional benchmark index poised for its longest streak of weekly advances in a year, as lower Italian and Spanish borrowing costs added to optimism Europe’s debt crisis may be contained.
· The Bombay Stock Exchange's Sensitive Index rose 117.11 points, or 0.7%, to end at 16154.62.
· Japan's Nikkei 225 index rose 1.4 percent to close at 8,500.02 and South Korea's Kospi index moved 0.6 percent at 1,875.68. Hong Kong's Hang Seng index vacillated before closing in positive territory, up 0.6 percent to 19,204.42. Australia's S&P ASX 200 was 0.4 percent higher at 4,195.90.
· Chinese shares fell with benchmark Shanghai Composite Index losing 1.3 percent to 2,244.58, while the Shenzhen Composite Index dropping 3.5 percent to 845.93.
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| 6th January 2012 | 13th January 2012 | Weekly Change % |
Sesagoa | Rs | 165.6 | 191.8 | 15.82 |
NMDC | Rs | 171.8 | 179.3 | 4.36 |
JSW | Rs | 569.35 | 662.5 | 16.36 |
SAIL | Rs | 84.1 | 95.55 | 13.61 |
Tata steel | Rs | 362.8 | 424 | 16.86 |
CIL | Rs | 319.8 | 345.5 | 8.03 |
Adani Power | Rs | 64.75 | 84.5 | 30.50 |
NTPC | Rs | 157.15 | 166.45 | 5.91 |
Reliance Power | Rs | 73.65 | 91.75 | 24.57 |
TATA power | Rs | 91.95 | 98.5 | 7.12 |
Gujarat NRE | Rs | 18.2 | 21.7 | 19.23 |
Essar Steel | Rs | 51.8 | 53.5 | 3.28 |
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Rio Tinto | ASD | 62.48 | 65.2 | 4.35 |
BHP Billiton | ASD | 35.24 | 36.6 | 3.85 |
Fortesue (ASX) | ASD | 4.44 | 4.75 | 6.98 |
China Shenhua Energy Comp (SHA) | RMB | 24.24 | 26.32 | 8.58 |
China Coal Energy Comp (SHA) | RMB | 8.66 | 9.3 | 7.39 |
*since closing is after 17:00 IST, the previous day closing is taken into consideration |
Finally, the projection for the coming week ::
Iron Ore:
· The recent disruption in the shipments from Brazil and Australia hasn’t cast much a spell on the spot prices and infact today being the week closing, OreTeam Price Index has witnessed a $1 per ton fall. The offer levels have already tumbled by $1 per ton in majority grades and buyers are unhappy with the high iron ore prices and falling steel price.
· Next week the prices may see some more decline as the Chinese buyers will slowly start leaving the markets and not to forget the 300,000 tons Valemax vessel is still unsold and being prepared for the spot market.
· Port stocks are steadily moving up instead of coming down and have breached the 97 million tons mark. The Indian sellers took advantage of the small gains in the week to push some material which will put the spot trader under pressure for the coming week.
· There is a slight expectation of the prices to move up if the number of buyers in the market increase which would be a very rare thing to look for. The falling steel prices will definitely burden the raw material prices.
· If the rumor of the China’s rate revision comes true prior to holidays, atleast by mid-week, then we might see $1-3 per ton increase, but from India only for the lower grades. The higher grades are already enjoying a premium and the traders are also not in a mood to sell at discounts.
Steel:
· The steel prices in China might not rise in the coming week as it is the last week for the Chinese before entering the vacation week. Since most of the prices for February have been kept stable by the mills, the buying will also be pushed to the coming month.
· A small superstition prevailing in the market is that buying fresh cargoes in the new year would bring in luck and prosperity. Hence, those behind the scenes will remain silent.
· Again the rumor of the rate revision will stop some buyers to purchase new stocks. They already know that the end product prices will remain the same hence they may take their chances and wait for the rate revision.
· A small instance where the steel prices might move up is the cut in production levels which may allow some mills to hike their prices marginally for a very short term.
· In India, the period from now to elections (mid-March) is quite crucial for the industry. There will be gradual growth but no good upside might be visible. Whether its automobile, cement or power, the growth would be slow but steady hence the demand may not rise drastically give a good push to the steel prices.
· Even at NCDEX, the gains were very swiftly covered up and forward contracts flattened showcasing the uncertain steel market in the country.
Vale’s southern Brazil iron-ore output reduces by 20% 1-13-12
Reportedly, world’s largest iron ore producer, Brazil’s Vales has just declared force majeure to buyers, as it will lose about 20% output in January as rains affect production.
Vale has 15 mines in southeastern Brazil, where happens the largest downpours since 1910, which will cause the company’s steel-making ingredient to shrink by 2 million tons.
Vale’s European clients would be more affected as they are more independent than Asian buyers, who are receiving shipments that haven been sent for the previous 45 days.
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Market Commentary 1-12-12
Iron Ore & Steel::
India IIP Figures:
· India's industrial output recovered in November providing a glimmer of optimism for the country. Output (INPIINDY) at factories, utilities and mines increased 5.9 percent in November from a year earlier after a revised 4.7 percent decline in the previous month. Now, it is likely that the RBI might keep the borrowing costs unchanged for a straight second month to battle inflation.
Trade At Closing:
· Markets close with some better results today as the number of concluded transactions remain on the better side comparatively.
· The steel mills are not showing any interest in fresh material and only the big reliable suppliers are able push in cargoes from India.
· The situation is steady and gradually corroding as the Chinese New Year vacations close in.
· OreTeam Price Index maintains yesterday’s closing levels.
Coal::
Europe is facing the warmest winters in about 30 years which has relaxed the demand of coal in the region. Sea-borne thermal coal prices slid again as the Atlantic trade saw little slowdown. The spot prices at ARA shed about a dollar following the drop in Crude Oil prices.
Meanwhile, a February loading standard South African thermal coal cargo was bid just above $105 per ton, down by more than a dollar (FOB Richards Bay).
Ferrous Scrap::
Imported scrap prices landing into India from Europe and Middle East held steady at Nhava Sheva. However, the European offers are for HMS1 and HMS2 are reported around $470 - $480 per ton, respectively on the CFR India terms. Meanwhile, the HMS (80:20) prices remained steady as the trade for the day began.
Moreover, Indian domestic scrap prices gained some pace at Alang, where ship breaking scrap prices gained about Rs. 200 per ton as the trade for the day commenced.
DRI/Pig Iron ::
Indian sponge iron prices depicted some movement at Durgapur (+300), Mandi Gobindgarh (+400), Raigarh (+400) and Rourkela (+400) during the morning session of trade.
The pig iron prices depicted at flat trend at all the major trading hubs including Durgapur, Jamshedpur, Keonjhar and Raipur.
Iron Ore & Steel 1-12-12
Ports Update This Morning: 1-12-12
· Tropical cyclone Heidi has halted operations at Australia's busiest port. BHP Billiton and Rio Tinto have stopped exports and battened down the hatches in anticipation of heavy rain and winds, which have been gusting over 100kph since Wednesday night. A total of 29 vessels, eight at berths within the harbour, and 21 anchored in the vessel queue, were sent to safer waters away from the path of the storm. All vessels were cleared and the port closed at 2am on Wednesday morning.
· Vale declared force majeure on iron-ore shipments losing approximately 2 million metric tons of the iron ore because of heavy rains in Brazil. Heavy rains since mid-December of 2011 in the states of Minas Gerais, Rio de Janeiro and Espirito Santo have created difficulties for its operations in the South and Southeast systems.
Trade This Morning: 1-12-12
· Impact of the weather cycle on Australia and Brazil not seen in the iron ore market as mills have adequate cargoes either positioned at their warehouses or at the ports.
· The steel inventories are also running high at the steel mills and stockyards due to less sales due to seasonal conditions and slacking demand.
· Steel prices have again lost nearly 20 yuan per ton mainly in the construction steel segment. Flat product prices are not likely to see any major upside as the big mills have already announced to keep the prices flat for the coming months.
· The weakness in the steel sector is dampening any movement in the iron ore prices. Not much of an upside is visible in the trade although some transactions are definitely gaining $1-2 per ton premium every now and then.
· The margins of both buyers and sellers are squeezed very badly which wouldn’t allow them to restock heavy volumes.
· Spot prices are moving up gradually but the stability cannot be predicted as China will close soon for vacations and the major restocking is already over. Port stocks are running high on the other side.
· China's inflation eased slightly in December to 4.1 percent, from November's 4.2 percent but has not eased as expected to below 4%.
Trade Feels:
· CISA announced yesterday that China's crude steel output is expected to rise by roughly 9.2 percent to 683 million tons in 2011, leaving great pressure on excess supply this year. Output in 2012 would continue to grow to approximately 700 million tons with the average utilization rate of 65 to 70 percent. The industry will exhibit a new pattern of “low price, low cost, lean inventory and tiny profit”.
· Hopes are very few as the buyers are not showing much interest in the Indian cargoes. – Trader from Shanghai
· The number of inquiries is slowly reducing. Last week we saw nearly 3-4 inquiries with some follow up from the mills but this week it has been comparatively silent and it may further slowdown in the coming days. We have some offers coming in from Iran now which we are trying to push into the market along with pellets. The Indian fines are losing interest gradually. – A large Hong Kong Trader with 3 Indian cargoes in hand
· Anticipating that the weather problems will give an advantage to the Indian material is wrong. The Chinese do not want to buy much material right now and those who want will pick up either from the ports or from people like us who already have standing cargoes. They wouldn’t wait for the new material now as vacations are closing in. – GM of a large trading house based in China
OreTeam Price Indices:
· OreTeam Price Index for Indian Iron ore (OTPX)
o 63.5/63% Fe fines - $133 per ton FOB Vizag
o 58% Fe fines - $107 per ton FOB Goa
o 54% Fe fines- $87 per ton FOB Goa
o 52% Fe fines- $78 per ton FOB Goa
o 50% Fe fines- $67 per ton FOB Goa
· OreTeam Freight Index for Superhandy & Panamax Freight on India- China Route(OTFX)
o Superhandy
§ ECI – China : $14 per wmt
§ WCI - China : $16 per wmt
§ Dual Port ECI – China: $14-15 per wmt
o Panamax
§ ECI – China : $13 per wmt
§ WCI - China : $15 per wmt
§ Dual Port ECI – China: $13-14 per wmt
Paper Markets:
· The last few days rally at SGX saw a little sleepy evening yesterday after the news of rains and cyclones hit the swap market. The next days there could be some light trade visible at SGX and already the contracts were seen closing lower. Jun’12 got the major dent of -0.89% with a closing tag of $138.63 along with calculated Q1’12 closing at $123.38, down -0.59%. The calculated Q2’12 retained some positive movement with an increase of 0.42% to hold around $120.42. The sentiment will not be strong in the coming days as the force majeure comes into play in the physical market by the major miner and actual trade will see a temporary pause for couple of days.
· SHFE rebar contracts are also witnessing a dull trade today. The weakness in the steel market is keeping the investor confidence to the lowest levels. The most traded May’12 contract was down 10 yuan this morning but traded volumes shrunk below 50%. Most of the trade is happening in the second half of the day within the last 2-3 hours of trading. Hence, the actual movement will only visible by day end. Till last noted May’12 was trading at 4211 yuan.
· SSEC is again staging an opposite move. All contracts mainly flat product based are looking up by 7-12 yuan. The most traded Mar’12 contract was up by 7 yuan to trade near 4266 yuan.
· At LME, most of the metals came down after a good rally which lasted nearly 5 sessions. Copper came down to $7,700 where as cash/buyer settled steel billets moved up to $524/525 gaining 1.91%/1.71% respectively. The future contracts retained their similar levels.
· NCDEX steel trade almost goes invisible this morning as only Feb’12 contract starts with some trade. The contract was down by Rs140 on opening. Last evening, both Jan’12 and Feb’12 steel long contracts lost -0.64% and -0.76% respectively to close at Rs33,960 per ton and Rs34,050 per ton respectively.
Equity Markets:
· Indian IIP numbers are expected by this evening which might halt some of the rally at the indices. BSE Sensex is witnessing a choppy session with negative bias taking cues from Asian peers.
· Asian stock markets fell Thursday, amid inflation data in China that failed to meet expectations and fears of a possible recession in Europe.
· Japan's Nikkei 225 Index fell 0.9 percent to 8,368.74, while Hong Kong's Hang Seng fell 0.1 percent at 19,128.89. Australia's S&P ASX 200 fell 0.2 percent to 4,178.50. Benchmarks in mainland China, Taiwan and Indonesia were also lower. South Korea's Kospi added 0.2 percent to 1,849.16. Benchmarks in Singapore and Thailand rose.
· In India-
o SAIL stock was up 0.76%
o JSW Steel down by -0.32%
o NMDC up 1.39%
o Tata Steel up by 1.25%
· Rupee was at 51.82/83 to the dollar, higher than Wednesday's close of 51.90/91
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Coal::
Sea-Borne Coal Trade
· Sea-borne thermal coal prices slid again as the Atlantic trade saw little slowdown. European demand has not picked as most of the Northern Europe is facing the warmest winters in about 30 years. Again, in the absence of fundamentals sea-borne coal prices were found following Crude Oil prices. On Thursday, a fall of dollar in the Crude Oil prices as risk aversion returned to the market and a rise in oil stockpiles in the US also affected the coal prices.
· More and more European utilities are looking to sell surplus inventories, putting more pressure on coal prices in the region. Reportedly, a March delivery DES ARA cargo was bid around $106.75 per ton and offered around $107.50 per ton, depicting a decline of about a dollar in the bid.
· Meanwhile, South African thermal coal prices fell more as Indian inquires faded away. A February loading South African thermal coal cargo was bid just above $105 per ton mark (FOB Richards Bay), down by more than a dollar. Moreover, a March loading FOB Richards Bay cargo was bid at $104.75 per ton and offered at $105.75 per ton, depicting a drop of $1.50 per ton over the previous day’s value.
· Asia-Pacific region saw little change in the spot prices. On Thursday, western Indonesian coast was hit by 7.3 magnitude earthquake. However, there is no immediate impact of thermal coal trade. Indonesian coal prices have remained stable. Reportedly, a sub-bituminous thermal coal cargo (FOB MV Sumatra) was offered around $43 per ton (5,300 kcal/kg GAD, TM 42%) for anchorage loading.
· In Australia, the FOB prices remained steady at the port of Newcastle as the weather is holding well in the coal producing area of Hunter Valley, despite of tropical cyclones hitting the Western Australian coast.
Paper Trade
· European paper trade depicted a downward trend, again, as the monthly contracts in the first quarter shed at least 50 cents for CME OTC DES ARA swaps (linked to API 2 index).
· Also, CME’s OTC FOB Richards Bay swaps (linked to API 4 index) recorded some fall in the monthly contracts for January, February and March. Meanwhile, the traded volumes of the second quarter remained low.
· Moreover, CME’s OTC China CFR Coal Swap Futures remained steady for all the monthly contracts of the first quarter.
· Meanwhile, SGX’s OTC CFR China swaps remained unchanged for the monthly contracts for the first quarter of 2012. However, SGX OTC FOB Indonesia Sub-bituminous swaps fell as the contracts for the months of January, February and March depicted a decline of 12 cents.
Financial Markets
· Moving on to the Indian financial markets, BSE’s Metal index opened at 10,328.31, was currently trading around 10,413.04*.
· Meanwhile, BSE Power index opened at 1,932.69 and was around 1,949.65*.
BSE Metals BSE Power
· Moreover, at NSE CNX Metal opened at 2,747.95 and was currently trading down at 2,771.00* and CNX Energy opened at 7,331.95, was currently at 7,300.25*.
*Sources BSE India and NSE India (Values depict the current levels till the report was published)