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CIS export prices fall to $610/MT- A one off offer as de-stocking
continues?:As per the metals press (SBB), CIS HRC export price has hit
$610/MT (FOB) as near term demand has fallen sharply. Chinese HRC export
prices have also fallen, but are higher than the above CIS export price. At $610
FOB, landed India import prices work out to Rs34,200/MT slightly lower than
current domestic HRC prices. In our view, the $610/MT HRC FOB offer price
could likely be one off in nature driven by de-stocking at buyer’s end.With Dec
quarter coking coal at $285/MT and spot iron ore at $167/MT, $610/MT HRC
in our view is a difficult price to sustain. Anecdotally, the metals press (SBB,
MB, Bloomberg) continues to highlight more moves by steel producers
(NLMK, MT) in Europe in to curtail steel production in light of the reduced
demand environment.
So are Indian mills likely to cut domestic prices- Unlikely in the near term
in our view: India’s steel market has behaved independently of the global steel
market, given its own peculiar demand supply dynamics over the last few
months. As of now domestic supply is still curtailed because of gas
availability/cost issues impacting steel mills in Western India, while iron ore
availability/cost impacting mills in South India,while DRI producers are seeing
curtailed production because of lump iron ore and coal price inflation. Prices at
the latest iron ore e-auction hit Rs3900/M against a base price of Rs2750/MT as
per media reports (BS) and more importantly state miner NMDC’s Karnataka
production also being sold through e-auction. In the ner term, it remains to be
seen if NMDC starts pricing iron ore sold from its mines in other states also at a
e-auction parity basis, which would significantly increase the cost inflation for
most of India’s steel producers. Domestic demand remains lack lustre and
against this back drop we do not see imports increasing materially, and the
current lack of large inventories in the system means large domestic price cuts
are unlikely, in our view.
Spot iron ore falls to $167/MT as Chinese buyers not in the market: Post
the Chinese holidays, spot iron prices have fallen quickly to $167/MT.
However against this back drop was the data, that September Chinese iron ore
imports at ~61MT were the second highest in the year after January indicating
significant re-stocking in September which has aggravated the price correction
in October (as mills have enough inventories currently).
Rio’s production update: As per JPM European Mining Analysts, coking coal
production at Rio was +36% against estimates, but copper production was lower
both q/q and y/y given mine strikes at Grasberg (still continuing), work stoppage
at Escondida and lower mill throughput and grades at Kennecott.
Zinc smelter utilization drops to 67% in September in China on falling zinc
prices.
India’s Sept steel consumption increased 4% y/y: India’s steel demand
remains in the doldrums with the JPC steel data highlighting Sept steel
consumption at only 4.4% (admittedly an improvement from the previous
months of 1-2% growth. M/M steel consumption declined by 4%. The more
interesting statistic in our view was steel production which reported 11%
m/m decline, as various plants have been hit on gas/iron ore.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
CIS export prices fall to $610/MT- A one off offer as de-stocking
continues?:As per the metals press (SBB), CIS HRC export price has hit
$610/MT (FOB) as near term demand has fallen sharply. Chinese HRC export
prices have also fallen, but are higher than the above CIS export price. At $610
FOB, landed India import prices work out to Rs34,200/MT slightly lower than
current domestic HRC prices. In our view, the $610/MT HRC FOB offer price
could likely be one off in nature driven by de-stocking at buyer’s end.With Dec
quarter coking coal at $285/MT and spot iron ore at $167/MT, $610/MT HRC
in our view is a difficult price to sustain. Anecdotally, the metals press (SBB,
MB, Bloomberg) continues to highlight more moves by steel producers
(NLMK, MT) in Europe in to curtail steel production in light of the reduced
demand environment.
So are Indian mills likely to cut domestic prices- Unlikely in the near term
in our view: India’s steel market has behaved independently of the global steel
market, given its own peculiar demand supply dynamics over the last few
months. As of now domestic supply is still curtailed because of gas
availability/cost issues impacting steel mills in Western India, while iron ore
availability/cost impacting mills in South India,while DRI producers are seeing
curtailed production because of lump iron ore and coal price inflation. Prices at
the latest iron ore e-auction hit Rs3900/M against a base price of Rs2750/MT as
per media reports (BS) and more importantly state miner NMDC’s Karnataka
production also being sold through e-auction. In the ner term, it remains to be
seen if NMDC starts pricing iron ore sold from its mines in other states also at a
e-auction parity basis, which would significantly increase the cost inflation for
most of India’s steel producers. Domestic demand remains lack lustre and
against this back drop we do not see imports increasing materially, and the
current lack of large inventories in the system means large domestic price cuts
are unlikely, in our view.
Spot iron ore falls to $167/MT as Chinese buyers not in the market: Post
the Chinese holidays, spot iron prices have fallen quickly to $167/MT.
However against this back drop was the data, that September Chinese iron ore
imports at ~61MT were the second highest in the year after January indicating
significant re-stocking in September which has aggravated the price correction
in October (as mills have enough inventories currently).
Rio’s production update: As per JPM European Mining Analysts, coking coal
production at Rio was +36% against estimates, but copper production was lower
both q/q and y/y given mine strikes at Grasberg (still continuing), work stoppage
at Escondida and lower mill throughput and grades at Kennecott.
Zinc smelter utilization drops to 67% in September in China on falling zinc
prices.
India’s Sept steel consumption increased 4% y/y: India’s steel demand
remains in the doldrums with the JPC steel data highlighting Sept steel
consumption at only 4.4% (admittedly an improvement from the previous
months of 1-2% growth. M/M steel consumption declined by 4%. The more
interesting statistic in our view was steel production which reported 11%
m/m decline, as various plants have been hit on gas/iron ore.
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