Indian Steel Industry to show Surplus Steel : ICRA

An overcapacity situation looms large on the Indian steel sector with about 25 million tonnes of new capacity likely to be commissioned in the next 18-24 months outstripping the growth in demand in medium term, rating agency ICRA said. 

"Almost 25 million tonnes of new capacity, which is about 30 per cent of the country's current production capacity, is expected to be commissioned in the next 18-24 months," ICRA said in a report. 

The capacity addition rate is likely to outpace domestic demand growth in the medium-term, it said, adding that as a result, margins of large players would be adversely affected. 

India is the world's fourth largest steel producer, having produced about 68 million tonnes of crude steel during 2010. Crude steel production in the country has gone up at a compounded annual growth rate of about 9.8 per cent between 2000 and 2010. 

The demand had been growing in double digits before the global crisis, but slowed down significantly in 2008. In the last two years, the growth rate was hovering between 6-8 per cent. 

ICRA said the consumption was expected to witness some moderation going forward, given the continuing slowdown in demand from key consuming sectors like construction, capital goods and automobiles. 

"Thus, the domestic steel industry is likely to face overcapacity in the medium-term, which in turn may push up domestic competition as well as exports, making India a net exporter of steel," the report said. 

ICRA said overcapacity, waning demand and higher capital charges for commissioning large projects are likely to affect the margins of the steel producers adversely in the near to medium-term. 

Indian Infrastructural Growth stalls : shows Data

Index of Eight Core Industries (Base: 2004-05=100)  September 2011

1.         The summarized Index of Eight Core Industries with 2004-05 base is given at the Annexure. 2.         The Index of Eight core industries having a combined weight of 37.90 per cent in the Index of Industrial Production (IIP) stood at 131.50 in September 2011 with a growth rate of 2.3% compared to its growth at 3.3% in September 2010.  During April-September 2011-12, the cumulative growth rate of the Core industries was 4.9% as against their growth at 5.6% during the corresponding period in 2010-11. Coal 3.         Coal production (weight: 4.38%) registered a growth of (-) 17.8% in September 2011 compared to its growth at (-) 1.8% in September 2010. Coal production grew by (-) 4.8% during April-September 2011-12 compared to its growth at 0.2% during the same period of 2010-11.  Crude Oil 4.         Crude Oil production (weight: 5.22%) registered a growth of 0.1 % in September 2011 compared to its growth at 12.5% in September 2010. Crude Oil production registered a growth of 5.1% during April-September 2011-12 compared to its growth at 10.2% during the same period of 2010-11. Natural Gas 5.         Natural Gas production (weight: 1.71%) registered a growth of (-) 6.4% in September 2011 compared to its growth at 12.6% in September 2010. Natural Gas production registered a growth of (-) 8.5% during April-September 2011-12 compared to its growth at 25.2% during the same period of 2010-11. Petroleum Refinery Products 6.         Petroleum refinery production (weight: 5.94%) had a growth of 4.4% in September 2011 compared to its growth at (-) 10.2% in September 2010.  Petroleum refinery production registered a growth of 4.7% during April-September 2011-12 compared to its 2.6% growth during the same period of 2010-11. Fertilizers 7.         Fertilizer production (weight: 1.25%) registered a growth of (-) 2.1)% in September 2011 against its growth at 0.3% inSeptember 2010.Fertilizer production grew by 0.6% during April-September 2011-12 compared to its growth at  (-) 2.3% during the same period of 2010-11.  Steel (Alloy + Non-Alloy) 8.         Steel production (weight: 6.68%) had a growth rate of 6.6% in September 2011 against its 11.7% growth in September2010. Steel production grew by 9.5% during April-September 2011-12 compared to its growth at 7.4% during the same period of 2010-11. Cement 9.         Cement production (weight: 2.41%) registered a growth of 0.9% in September 2011 against its 5.2% growth inSeptember 2010. Cement Production grew by 2.5% during April-September 2011-12 compared to its growth at 4.7% during the same period of 2010-11. Electricity 10.       Electricity generation (weight: 10.32%) had a 8.9% growth in September 2011 compared to its 2.1% growth inSeptember 2010. Electricity generation grew by 9.3% during April-September 2011-12 as against its 4.1% growth during the same period of 2010-11.

Indian Core Industries Index rises by 7.8%

Ministry of Commerce & Industry30-August, 2011 17:48 IST

Index of Eight Core Industries (Base: 2004-05=100) July 2011

The Index of Eight core industries having a combined weight of 37.90 per cent in the Index of Industrial Production (IIP) with base 2004-05 stood at 143.22 in July 2011 and registered a growth of 7.8% compared to 5.7% registered in July 2010.  During April-July 2011-12, eight core industries registered a growth of 5.8% as against 6.5% during the corresponding period of the previous year 2010-11. Coal Coal production (weight of 4.38% in the IIP) registered a growth of 2.4% in July 2011 compared to growth of 4.5% in July 2010. Coal production grew by 0.7% during April-July 2011-12 compared to an increase of 0.6% during the same period of 2010-11.  Crude Oil Crude Oil production (weight of 5.22% in the IIP) registered a growth of 1.4 % in July 2011 compared to a growth of 15.8% in July2010. The Crude Oil production registered a growth of 7.3% during April-July 2011-12 compared to 8.4% during the same period of 2010-11. Natural Gas Natural Gas production (weight of 1.71% in the IIP) registered a growth of (-) 8.2% in July 2011 compared to growth of 20.0% in July2010. The Natural Gas production registered a growth of (-) 9.7% during April-July 2011-12 compared to 32.3% during the same period of 2010-11. Petroleum Refinery Products Petroleum refinery production (weight of 5.94% in the IIP) registered a growth of 3.9% in July 2011 compared to growth of 13.7% inJuly 2010. The Petroleum refinery production registered a growth of 4.9% during April-July 2011-12 compared to 7.3% during the same period of 2010-11. Fertilizers Fertilizer production (weight of 1.25% in the IIP) registered a growth of (-) 1.6% in July 2011 compared to (-) 0.3% in July2010.Fertilizer production grew by 0.4% during April-July 2011-12 compared to an increase of (-) 2.0% during the same period of 2010-11.  Steel (Alloy + Non-Alloy) Steel production (weight of 6.68% in the IIP) registered a growth of 15.5% in July 2011 compared to (-) 2.9% in July 2010. Steel production grew by 10.1% during April-July 2011-12 compared to an increase of 5.5% during the same period of 2010-11. Cement Cement production (weight of 2.41% in the IIP) registered a growth of 10.6% in July 2011 compared to (-) 0.2% in July 2010. Cement Production grew by 1.8% during April-July 2011-12 compared to an increase of 5.3% during the same period of 2010-11. Electricity Electricity generation (weight of 10.32% in the IIP) registered a growth of 13.0% in July 2011 compared to a growth of 4.2% in July2010. Electricity generation grew by 9.4% during April-July 2011-12 compared to 5.3% during the same period of 2010-11.

Indian Miners in Karnataka: Sesa Goa, JSW Steel, etc

Mining ban extended in Karnataka

Supreme Court (SC) extends mining ban to Tumkur and Chitradurga districts:

Central Empowered Committee (CEC) had found that iron ore miners
resorted to illegal mining activity in Chitradurga and Tumkur districts of
Karnataka resulting in environmental damage and loss of forest cover. As per
CEC, the level of illegal mining and the consequential environmental
degradation in these two districts were similar to that in Bellary district. Thus,
based on the CEC’s suggestions, the SC has extended the ban to Tumkur and
Chitradurga districts. These two district account for approximately 20% of
Karnataka’s iron ore production. Earlier (on July 29, 2011), the SC had
ordered a blanket ban on mining in Bellary district of Karnataka (accounts for
80% of Karnataka’s iron ore production).


Severe steel production cuts underway in the region

With extension of mining ban in Chitradurga and Tumkur districts, iron ore
 production will decline drastically in the state which will be followed up
 by severe cuts in steel production in the region. Some of the plants in the
 region have been already shut down while several plants are running at
a lower utilisation levels on the back of shortage of iron ore to feed their furnaces.
 Steel industry in the region requires approx. 2.9mn tonnes of iron ore per month.
Currently iron ore from Karnataka is used to feed plants of companies that
include JSW Steel, Kalyani Steels, Mukand Steels, Kirloskar Ferrous, MSPL,
 BMM Ispat etc.

Further, several sponge iron manufacturers in Tamil Nadu and Goa also
source iron ore from Karnataka. On the supply front, NMDC’s Bellary mine is
the only major mine operating in the region; however, it is still to achieve its
targeted run-rate of 1mn tonne per month from its Bellary mines.
Auctions of piled-up inventory may provide some relief: The current iron ore
inventory at Karnataka’s mines is estimated at 25mn tonnes, which includes
~11mn tonnes of high-grade iron ore. As per JSW Steel, the SC is expected
to provide guidelines on auction of this iron ore inventory on September 02,
2011. SC has indicated that it will ensure that the required amount of ore is
released so that the steel industry does not suffer. Further, SC will look into
rehabilitation and forestation package and henceforth, permit regulated
mining in the region. This may take several months.

Sesa Goa’s Chitradurga mine to be shut:  Sesa Goa operates an iron ore mine
in Chitradurga district which would be shut down until further update by SC.
Our earlier estimate of production and sales volumes from Chitradurga mine
for FY2012 was 5mn tonnes (21.8% of Sesa’s total production volumes for
FY2012). With mining ban in the region,  now prune  production and
sales volume estimates for FY2012 and FY2013. It is expected no
production from Chitradurga mines. Except a  lower our target price to `253
(`335), valuing the stock at 3.0x FY2013 EV/EBITDA

The Question now hang on the fire, to the Extent to Which and Whether the companies
to Punishment. Shri Rao, JSW Steel, in his Press Conference had, Disassociated from t
the Mafia, But the Lok Ayuktta Report had mentioned there name. Market is expecting
Some Fine to be imposed on some of the Biggies  and  whether is takes the proportion of
the ' 2G ' Scam or worse..?

World steel Production of 64 contries

July 2011 Crude Steel Production

Brussels - World crude steel production for the 64 countries reporting to the World Steel Association (worldsteel) was 127 million metric tons (mmt) in July. This is 11.5% higher than July 2010.

China’s crude steel production for July 2011 was 59.3 mmt, an increase of 15.5% compared to July 2010.

Elsewhere in Asia, Japan produced 9.1 mmt of crude steel in July 2011, down -1.2% compared to the same month last year. South Korea’s crude steel production for July 2011 was 5.7mmt, 21.7% up compared to July 2010.

22 Aug 2011In the EU, Germany’s crude steel production for July 2011 was 3.7 mmt, an increase of 5.7% on July 2010. Spain’s crude steel production for July 2011 was 1.0 mmt, down -1.9% on July 2010. The UK produced 0.8 mmt of crude steel in July 2011, an increase of 7.5% compared to July 2010.

Turkey produced 2.9 mmt of crude steel in July 2011, 19.3% higher than July 2010.

The US produced 7.5 mmt of crude steel in July 2011, an increase of 10.2 % compared to July 2010.

Brazilian crude steel production for July 2011 was 3.1 mmt, 8.2% higher than July 2010.

The world crude steel capacity utilisation ratio of the 64 countries in July 2011 was 79.7%, 3.4 percentage points lower than in June 2011. Compared to July 2010, the utilisation ratio in July 2011 increased by 4.9 percentage points.

Indian Industrial Production Cut to 8.2%: CMIE

 Centre for Monitoring Indian Economy (CMIE) has scaled down its forecast for the industrial production growth in FY 12 to 8.2 per cent from 8.7 per cent earlier.

A lower than expected production growth witnessed by a few industries in the first 2-4 months of the year and delays in commissioning of plants by companies prompted it to revise the forecast downwards, CMIE said in its monthly review here.
Delays in commissioning of power projects have caused a downward revision in the forecast for the growth in electricity generation in FY 12 to nine per cent from 10.1 per cent earlier, it said.
CMIE revised its forecast for growth in steel production in FY 12 from 12 per cent to 9.5 per cent due to a lower-than-expected growth in steel consumption in the first three months, and a shortfall of iron ore likely to be faced by the steel manufacturing units located in Karnataka, following the suspension of mining from Bellary ordered by the Supreme Court.

Postponement of project commissioning by HPCL-Mittal Energy, Essar Oil and MRPL and a lower than expected growth in the June 2011 quarter prompted us to bring down our forecast for growth in petroleum throughput in FY 12 from 9.3 per cent to 7.7 per cent. Consequently, our forecast for diesel, petrol and other petroleum products has been revised downwards, CMIE said.

Indian core Industry data Stagnates in June 2011

  
Ministry of Commerce & Industry29-July, 2011 18:02 IST
Index of Eight Core Industries (Base: 2004-05=100) June 2011
The Index of Eight core industries having a combined weight of 37.90 per cent in the Index of Industrial Production (IIP) with base 2004-05 stood at 138.98 in June 2011 and registered a growth of 5.2% compared to 4.4% registered in June 2010. During April-June 2011-12, eight core industries registered a growth of 5.0% as against 6.8% during the corresponding period of the previous year 2010-11.
Coal
Coal production (weight of 4.38% in the IIP) registered a growth of (-) 3.3% in June2011 compared to growth of 0.8% in June2010. Coal production grew by 0.2% during April-June 2011-12 compared to an increase of (-) 0.6 during the same period of 2010-11.
Crude Oil
Crude Oil production (weight of 5.22% in the IIP) registered a growth of 7.7 % in June2011 compared to a growth of 6.8% in June2010. The Crude Oil production registered a growth of 9.5% during April-June 2011-12 compared to 5.9% during the same period of 2010-11.
Natural Gas
Natural Gas production (weight of 1.71% in the IIP) registered a growth of (-) 11.7% inJune 2011 compared to growth of 25.4% inJune 2010. The Natural Gas production registered a growth of (-) 10.2% during April-June 2011-12 compared to 37.0% during the same period of 2010-11.
Petroleum Refinery Products
Petroleum refinery production (weight of 5.94% in the IIP) registered a growth of 4.7% in June 2011 compared to growth of 2.9% inJune 2010. The Petroleum refinery production registered a growth of 5.3% during April-June 2011-12 compared to 5.3% during the same period of 2010-11.
Fertilizers
Fertilizer production (weight of 1.25% in the IIP) registered a growth of (-) 2.4% inJune 2011 compared to (-) 6.7% in June2010.Fertilizer production grew by 1.1%during April-June 2011-12 compared to an increase of (-) 2.6% during the same period of 2010-11.
Steel
Steel production (weight of 6.68% in the IIP) registered a growth of 12.5% in June2011 compared to 4.3% in June 2010. Steel production grew by 7.8% during April-June2011-12 compared to an increase of 8.6% during the same period of 2010-11.
Cement
Cement production (weight of 2.41% in the IIP) registered a growth of (-) 0.8% in June2011 compared to 3.7% in June 2010. Cement Production grew by (-) 0.9% during April-June 2011-12 compared to an increase of 7.0% during the same period of 2010-11.
Electricity
Electricity generation (weight of 10.32% in the IIP) registered a growth of 8.2% in June2011 compared to a growth of 3.8% in June2010. Electricity generation grew by 8.3% during April-June 2011-12 compared to 5.7% during the same period of 2010-11.
N.B: Data are provisional. Revision has been made based on revised data obtained.

POSCO warning and steel Production: advance Indicators ....?

P

 World crude steel production for the 64 countries reporting to the World Steel Association (worldsteel) was 128 million metric tons (mmt) in June. This is 8% higher than June 2010.

World crude steel production in the first six months of 2011 was 757.8 mmt, 7.6% higher in comparison with the same period of 2010. All major steel-producing regions showed increased production.

China’s crude steel production for June 2011 was 59.9 mmt, an increase of 11.9% compared to June 2010.

In the EU, Germany’s crude steel production for June 2011 was 3.9 mmt, an increase of 0.2% on June 2010. Italy produced 2.6 mmt, 15.2% higher than the same month in 2010. Spain’s crude steel production for June 2011 was 1.5 mmt, up 4.5% on June 2010. France produced 1.4 mmt of crude steel in June 2011, a decrease of -6.1% compared to June 2010.

Elsewhere in Asia, Japan produced 8.9 mmt of crude steel in June 2011, down -5% compared to the same month last year. India produced 6.0 mmt for June 2011, an increase of 7.3% over June 2010. South Korea’s crude steel production for June 2011 was 5.7mmt, 19% up compared to June 2010.

Turkey produced 2.8 mmt of crude steel in June 2011, 12.3% higher than June 2010.

The US produced 7.2 mmt of crude steel in June 2011, an increase of 1.7% compared to June 2010.

Brazilian crude steel production was 3.0 mmt, 3.9% higher than June 2010.

The world crude steel capacity utilisation ratio of the 64 countries in June 2011 was 82.8%, 1.2 percentage points higher than in May 2011. Compared to June 2010, the utilisation ratio in June 2011 increased by 2.5 percentage points.

POSCO world's third-biggest steelmaker, warned of weakening demand growth and persistently high input costs in the second half, after posting a 17 percent fall in quarterly operating profit. 


Steelmakers' earnings are set to be further squeezed as record production in China floods the market when demand is crumbling amid tightening monetary policy in China and debt problems in Europe and the United States. 


High prices of iron ore and coking coal, which rose between 25 and 47 percent quarter on quarter in April-June, show no signs of a sharp retreat. 


"Sluggish demand and the oversupply issue will stay for the time being (and) Chinese demand will not strengthen. Investors do not find POSCO attractive," said Kim Se-hoon, a fund manager at Assetplus Investment Management, which owns POSCO shares. 


POSCO, which trails ArcelorMittal and Baosteel , said April-June operating profit was 1.5 trillion won ($1.4 billion), broadly in line with the consensus forecast of 1.46 trillion won in a poll by Thomson Reuters I/B/E/S. 


The South Korean firm raised its domestic product prices for the first time in nine months in April, which helped sales rise by 27 percent to 10 trillion won, but profit dipped as it failed to fully pass on cost increases. 


The price rise was also overshadowed by cheaper imports from Japanese rivals struggling to make up for a demand slump from customers such as automakers after the March 11 earthquake. 


CHINA, HIGH COSTS WEIGH 


Shares in POSCO, which counts billionaire investor Warren Buffett's Berkshire Hathaway as a major shareholder, have underperformed the wider market this year.