JSW Steel profits fall drastically due to weak demand.

JSW Steel has registered 56.4% fall in its Q1 of FY19-20 (April-June) consolidated net profit at Rs 1,028 crore on the back of lower sales volumes due to subdued steel demand. The company had reported profit of Rs 2,366 crore in the same period last fiscal.

Even though the company maintained its annual guidance in production, which was up three percent, its sales were down by two percent. Revenue of the company declined 3.4 percent at Rs 19,812 crore against Rs 20,519 crore.

The demand slowdown has led to higher inventory levels. While overall, the inventory was at 1.2 million tons, up 3 lakh tons from a year ago, the finished goods inventory increased to 25 days, from the otherwise 20 days.

But the company is hopeful of demand picking up in the coming quarters on the back of higher Government spending on infrastructure.

Tata Steel completes acquisition of Bhushan Energy Ltd.

Tata Steel on Saturday announced it had completed the acquisition of debt-ridden Bhushan Energy Ltd.

The announcement came after the National Company Law Tribunal (NCLT) approved the resolution plan of Tata Steel to acquire Bhushan Energy for around Rs.800 crore.

Pursuant to the acquisition, the company holds 99.99% of the total equity share capital of BEL. Bhushan Energy was a subsidiary of Bhushan Steel Ltd, which was also taken over by Tata Steel last year in May, and later renamed as Tata Steel BSL Ltd.

Tata Steel had offered Rs.35,200 crore in cash to acquire Bhushan Steel, besides Rs.1,200 crore to creditors and convert the remaining debt owed to banks to equity.Incorporated in 2005, Bhushan Energy is based in Dhenkanal, Odisha.

STEEL PRICES UNDER IMMENSE PRESSURE

Despite the mills’ best efforts, steel prices have been unable to gain much traction so far in 2019. Price increase announcements of $40/ton in January and February yielded partial and apparently temporary gains for steelmakers. The prices of all flat-rolled steel products are now well below where they were at the beginning of the year, which may be good news for fabricators and other steel users, but is not-so-good news for steel producers and distributors that have seen their margins and the value of their inventories erode.

SMU tracks steel prices each week and publishes its SMU Price Momentum Indicator, which signals whether steel prices are more likely to move up, down, or sideways in the coming 30 days. Currently, SMU’s market momentum is lower for hot-rolled and plate products and neutral for cold-rolled and galvanized.

Mill price increases cannot succeed without the cooperation of distributors. They are on the front lines in the spot market, and it’s their day-to-day decisions about whether to deal or hold the line that ultimately translate into price changes. SMU’s latest survey data suggests that support for higher prices is waning among service centers. About 90 percent of service center executives responding to SMU’s latest poll said they are having difficulty passing along higher prices to their customers.

In its twice-monthly survey, SMU asks manufacturers if they are seeing higher prices from service centers. In mid-March, around 40 percent of respondents said their service center suppliers were seeking higher prices. In the latest data, that figure had declined to 17 percent.

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Steel prices increasing rapidly.

Steel prices in India may go up for the third time in a month – a rare instance -as companies pass on the increase in iron ore rates.

According to sources, the third hike may take place on March 1. The increase will be of Rs 1,000 a ton, taking the total increase within a span of 30 days to Rs 2,750 a ton. The latest round will take price of hot rolled steel to Rs 44,200 a ton.

“Such an increase has rarely happened, it hasn’t taken place in the last eight years,” an industry official said.

Prices were hiked, by Rs 750 a ton, for the first time in the first week of February. The second increase, of Rs 1,000 a ton, came in the third week of the month.

The latest increase in steel prices comes after three consecutive months of softening rates in India, and the world over. Since November, prices had crashed, especially because of the China factor.

Demand in China, the world’s largest steel market, has softened since November, even though production has also been cut.

But an accident in a Brazilian iron ore mine owned by Vale SA, the world’s largest producer, pushed up prices of the raw material. According to reports, the accident in a dam will impact about 70 million tons of iron ore production.

This has led to an increase in steel prices in the global market.

Tata Steel hedges against ore uncertainty

Tata Steel Ltd’s quest to secure iron ore supplies for its European steel facilities has achieved a key milestone. It will invest Canadian $300 million, or Rs. 1,350 crore, for buying an 80% stake in the direct shipping ore (DSO) project of New Millennium Capital Corp. (NMCC), a Canadian mineral explorer.

The joint venture will use the money to develop the mine, and in return, will supply all the output to Tata Steel.

The DSO project is expected to start supplies in 2012 to Tata Steel, which will pay benchmark world prices to the company. Thus, it will not get preferential pricing, though it may able to negotiate for longer term contracts.

The big iron ore mining companies, such as BHP Billiton Ltd and Rio Tinto Plc, have shifted to a quarterly pricing system. But Tata Steel will get assured supplies of specified grades, and it can also optimize on freight costs due to proximity to its European operations.

Source:http://www.livemint.com/2010/09/15232736/Tata-Steel-hedges-against-ore.html

Iron ore prices set record

Iron ore market is hotting up in India. Following a rise in shipping freight rates and railway charges, iron ore prices (high grade) in the spot market have touched a record high of $175 a tonne.

Another reason for the price rise is increased demand from China. The rise in demand is due to port congestion in Brazil and Australia, the top two iron ore suppliers to China.

Federation of Indian Mineral Industries (FIMI) said the port congestion has led to increase in shipping freight rates.

The freight rate for Indian iron ore has touched $46 a tonne in October from $35 a tonne in September, up 28 per cent.

According to FIMI, ships have to wait for a longer period at the Brazilian and Australian ports. The port congestion at these countries has impacted the freight rates due to slow movement of ships.

Exporters are paying more surcharges to the Indian Railways since the last 30 days. The Indian Railways has increased the yard congestion surcharge on iron ore by 11 percentage points to 35 per cent.

This is the second hike in yard congestion surcharge this year. The busy season surcharge has also gone up to 7 per cent from 6 per cent.

Shipping freight prices and local railway prices are both included in the international spot iron ore price. Chinese steel mills, however, are still buying Indian iron ore because of the huge demand.

During November every year, the Chinese steel mills negotiate the iron ore prices for long term lease with Brazil, Australia and India. Prior to the leasing, the mills tend to increase their stocks through spot trading. Consequently, they are willing to pay a higher price before the negotiation begins.

During September, the iron ore price was $155 a tonne as against $140 a tonne in August. Last fiscal, China accounted for 84 per cent of India’s total iron ore exports of 92 million tonne.

Iron ore prices set record

Iron ore market is hotting up in India. Following a rise in shipping freight rates and railway charges, iron ore prices (high grade) in the spot market have touched a record high of $175 a tonne.

Another reason for the price rise is increased demand from China. The rise in demand is due to port congestion in Brazil and Australia, the top two iron ore suppliers to China.

Federation of Indian Mineral Industries (FIMI) said the port congestion has led to increase in shipping freight rates.

The freight rate for Indian iron ore has touched $46 a tonne in October from $35 a tonne in September, up 28 per cent.

According to FIMI, ships have to wait for a longer period at the Brazilian and Australian ports. The port congestion at these countries has impacted the freight rates due to slow movement of ships.

Exporters are paying more surcharges to the Indian Railways since the last 30 days. The Indian Railways has increased the yard congestion surcharge on iron ore by 11 percentage points to 35 per cent.

This is the second hike in yard congestion surcharge this year. The busy season surcharge has also gone up to 7 per cent from 6 per cent.

Shipping freight prices and local railway prices are both included in the international spot iron ore price. Chinese steel mills, however, are still buying Indian iron ore because of the huge demand.

During November every year, the Chinese steel mills negotiate the iron ore prices for long term lease with Brazil, Australia and India. Prior to the leasing, the mills tend to increase their stocks through spot trading. Consequently, they are willing to pay a higher price before the negotiation begins.

During September, the iron ore price was $155 a tonne as against $140 a tonne in August. Last fiscal, China accounted for 84 per cent of India’s total iron ore exports of 92 million tonne.

Maruti says high metal prices hurting

Maruti Suzuki India Ltd aims to cut costs and improve productivity to offset a rise in metal prices, its chief executive said on Wednesday.

“Prices of not only steel but aluminium, copper are rising and it is hurting car makers,” Shinzo Nakanishi told reporters after launching a new car model, the Swift Dzire.

The car will be priced at between Rs 449,000 and Rs 590,000 ($11,197-$14,713) for petrol versions and between Rs 539,000 and Rs 670,000 for diesel variants.

Maruti, which has nearly half the Indian market with such popular models as the Alto and the Swift hatchback, is 54.2% owned by Suzuki Motor Corp.

                                                                                        Source: http://economictimes.indiatimes.com

China’s steel output

China’s steel output, already the world’s largest, is expected to rise to nearly one bln tons per year by as early as 2015, said an Australian government official.China, which this year is expected to produce around 480 mln tons of steel, is seen doubling that figure to nearly one bln tons within eight years, said Stuart Smith, deputy secretary general of Western Australia’s Department of Industry and Resources.

Speaking at an industry conference here, he said his state, Australia’s largest producer of the major raw materials used in steelmaking, is hoping to tap around half of China’s iron ore import market by that time.

Smith said China is expected to import a total of over 800 mln tons of iron ore in 2015, mainly from Australia, Brazil and India, with imports comprising well over half of China’s total iron ore demand then.

                      SOURCE:http://www.iii.co.uk/news/?type=afxnews&articleid=6363799&action=article