VITAL INDUSTRY UPDATES – 14/04/2015

April 14, 2015 11:21 am Published by

Soya yields to cheap imported oils

Notwithstanding strong global cues, soya oil ruled stable with soya refined being quoted at ₹600-605, while soya solvent ruled at ₹585-90 for 10 kg. Even as there is report of decline in soyabean and mustard output in the country this year, weak buying support and rise in pressure of cheap imported oils has reigned in the uptrend in soya oil, said Suresh Agrawal, a local trader. Soyabean traded marginally higher at ₹3,540-3,600 (₹3,350-3,450 a quintal last week) on improved global cues. Meagre stock with crushers also perked up plant deliveries of soyabean today to ₹3,600 (₹3,500-90). Soyameal too edged up with its prices on the spot at ₹31,500-32,000 a quintal

Chinese power equipment faces potential ban in India

THE Indian Electronics and Electricals Manufacturers’ Association (IEEMA) has alleged that power transmission infrastructure in 18 major Indian cities is vulnerable to a potential hack, resulting in national security threats and a major disruption of power.

In a reported letter to the National Security Advisor Mr Ajit Doval, the representative body of power equipment makers has asked for a complete ban on Chinese equipment in the Indian power sector citing security concerns.

Awarding projects related to power generation, transmission and distribution network to Chinese companies will be a serious threat to national security as the electric distribution system carries power to pipelines, water systems, telecommunications and other critical infrastructure, while also serving critical government or military facilities,” the IEEMA letter stated.

 

Steel imports surge 71 pc in FY15

STEEL imports have surged by 71 per cent to touch a record high of 9.31 million tonnes (mt) during FY15, adding to the mounting pressure on domestic companies’ margins which are already squeezed.

While steelmakers in India, who remained net importers for the year, have been facing problems for some time, primarily due to higher prices of raw materials, their counterparts in China, Japan and Russia were able to take advantage of lower iron ore prices, and in some cases, sops offered by their respective governments.

India imported 7.38 mt of steel in FY10, 6.66 mt in FY11, 6.86 mt in FY12, 7.93 mt in FY13 and 5.45 mt in FY14.

Exports, however, have been declining, especially in recent years. Outbound shipments of steel stood at 3.25 mt in FY10 and grew to 5.98 mt in FY14, only to drop by 8 per cent to 5.5 mt in the last fiscal. “Due to rising imports from countries like China, Japan and Russia, the domestic steel industry is struggling to retain margins. Cost structure in these countries has been significantly lowered on account of a fall in iron ore prices, and depreciation of their currencies against the dollar. So, in dollar terms, their cost of production has come down,” said an analyst.

 India likely to overtake China in thermal coal imports

India is likely to surpass China in thermal coal imports to become the world’s largest importer of dry fuel used to generate electricity, as its demand has increased manifold in the last 15 years in view of increased power requirements.

 

In 2014, India’s thermal coal imports had increased by 15 per cent to an estimated 162 million tonnes (mt). With Chinese imports likely to decline in the coming years, India could emerge as the largest seaborne importer of steam coal.

In February, China imported an almost four-year low of 5.86 mt of thermal coal, down by 47.3 per cent in the year, from 24.7 per cent in January, sources said.

Meanwhile, India’s thermal coal imports, which stood at just 25 mt in 2000, have increased to around 162 mt in 2014 and could rise to a staggering 200 mt by 2017, accounting for a fifth of the world seaborne thermal coal trade, sources pointed out.

The country has to depend on imported coal as the quality of the domestic product is considered inferior, with a high ash content of over 30 per cent. Power companies blend indigenous coal with imported varieties to obtain productivity benefits, it is learnt.

Billionaires halt coal output in India pending new permits

Coal mines recently auctioned by India’s government have been forced to halt production pending fresh permits, raising prospects of higher fuel costs for the new owners including Hindalco Industries Ltd. and Sesa Sterlite Ltd.

The stoppage will last for about four months at the mine won by Monnet Ispat & Energy Ltd. in the central state of Chhattisgarh, company President Amitabh Mudgal said. Starting 1 April, billionaire Kumar Mangalam Birla-owned Hindalco and Sesa Sterlite, the nation’s biggest aluminum producers, stopped work at the mines they acquired, said two company officials familiar with the development. The officials asked not to be identified because they aren’t authorized to speak to the media.

 

Matters related to ownership transfers are also thwarting work at the mines and the winning companies will have to spend more either importing coal or pay market rates at monopoly supplier Coal India Ltd.’s auction sales. The stoppage belies the Narendra Modi’s government’s commitment to ensure coal production isn’t disrupted as power plants, roads, bridges and other infrastructure are added to boost economic growth.

“The auctions have led to a change of owners, which means a possible disruption in coal output for at least three to six months,” Neelkanth Mishra, managing director for equity research at Credit Suisse Securities (India) Pvt., said in an email.

Hindalco shares declined as much as 2% to Rs.135.10, the most in two weeks, and traded at Rs.135.50 as of 2.22pm in Mumbai. Sesa Sterlite fell as much as 2.3% to Rs.197.80, while Monnet Ispat rose 0.4% to Rs.55.55.

Illegal, arbitrary

In September, the nation’s top court canceled most of the 218 coal mines given away to companies for their own use since 1993, terming the allocations illegal and arbitrary. Modi, who took office in May last year, aims to boost growth to as much as 8.5% from 7.4% and attract foreign investments to Asia’s third-biggest economy.

The disruptions in supplies can last for as long as two years should the companies fail to ensure shipments of the coal to their plants, Mishra said.

“Mines where there are new owners are closed as they sort out issues on transfer of assets with the previous owners,” said Anthony Desa, chief secretary of the government of Madhya Pradesh, a central Indian state where some of the coal blocks are located. “There’s no difficulty from our side in giving approvals provided they meet all the norms.”

 

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This post was written by Atlantic Admin