April 16, 2015 11:01 am Published by

Pressure is mounting on MCX-Copper

The outlook is turning weaker for the Copper futures contract traded on the Multi Commodity Exchange (MCX).

The contract had traded in a narrow range of ₹375 and ₹383 a kg and oscillated around the 21- and 100-day moving average levels all through last week before witnessing a sharp fall on Tuesday.

Additionally, the reversal from the high of ₹398.8 recorded in March has happened from a long-term trend line resistance level which leaves a negative bias. Key support is at ₹367.5.

A break below this level can drag the contract lower to ₹360. It will also increase the danger of the fall extending to ₹350.

Traders with a short-term perspective can initiate fresh short position at current levels. Stop-loss can be placed at ₹376 for the target of ₹362.

Medium-term traders can hold the short position with a wide stop-loss at ₹382 for the target of ₹355.

Intermediate rallies to ₹378 and ₹380 if seen can be used to accumulate short positions.

The downside pressure will ease slightly if the contract manages to reverse higher from the immediate support at ₹367.5. An up move to ₹375 and ₹380 is possible in that case.

However, the outlook for the contract will turn positive only if it records a decisive break and close above ₹380.

Such a break can take it higher to the next targets of ₹385 and ₹390.

CIL moves to rationalise coal linkage for southern gencos

State-run miner Coal India Ltd has initiated a process to rationalise coal linkages for various power generation companies in southern States, while also seeking to work out some minor coal swap arrangements within its fold.

At a meeting held in Hyderabad, where CIL Chairman Sutirtha Bhattacharya and its Director-Marketing BK Saxena interacted with officials of State-owned generation companies such as TS Genco, AP Genco, Tangedco, TNEB, KPCL as well as the Railways, the focus was on improving supplies and providing better logistics for supplies.

One of the decisions taken was to ease the pressure on supplies from Mahanadi Coalfields Ltd, a CIL subsidiary, through some swap arrangements. There’s growing demand for coal from Mahanadi Coalfields, but lack of logistics facilities hampers supply to power plants. If TS Genco, which currently gets about 2 million tonnes of coal from MCL, could source the fuel from Singareni Collieries Company Ltd (a coal miner jointly owned by the Telangana and Union governments), the coal produced by MCL could be supplied to other power makers in South India.

During the meeting, CIL has assured generation companies of improving supplies once the necessary arrangements to evacuate and transport coal are made. This could be by providing supplies from some of the other CIL group companies.

TS Genco, which is planning to increase the power generation capacity by 6,000 MW, and AP Genco have sought additional coal supplies from CIL.

A number of power companies in the South are dependant on MCL for fuel. CIL’s effort is to ease some pressure on its subsidiary till there’s a mechanism to evacuate and transport coal generated at its mines. One of the problems faced by coal miners is that they are unable to push additional coal even after production as there is limitation in terms of availability of rakes to transport. The Railways, too, is working out ways to making necessary arrangements.

Cement companies make slow progress in complying with air pollution norms

Even as the Modi Government is working to ensure that mechanisms for curbing pollution are put in place, the cement industry has been slow to implement air pollution norms.

Less than 5 per cent of the plants have taken steps to comply with the air pollution norms, notified by the Ministry of Environment and Forest (MoEF) in 2014. As of now, 194 cement plants have to fully comply with the notification by June 30, 2016.

The MoEF had asked all 194 cement plants in the country to reduce their particulate matter emission by a third. Similarly, sulphur dioxide and nitrogen dioxide emissions are also to be reduced. But most of the plants have neither placed the orders for setting up pollution control units nor given any contracts for retrofitting the existing units.

According to industry estimates, a number of plants are spewing out about 100 mg/Nm3 of particulate matter, which has to be reduced to 30 mg/Nm3 by either setting up new Electrostatic Precipitator (ESP) units or retrofitting the existing ones. An ESP unit is capital intensive, sometimes costing about ₹10 crore.

Many old plants simply don’t have the space to set up the units. Some plants might have to reconfigure the whole production process, so as to comply with the pollution control norms. Established cement players are simply dragging their feet on the matter.

This year the cement plants will go into a semi-shutdown mode during the monsoon season for maintenance and overhaul operations. But since the orders have not been placed with ESP equipment suppliers, the cement companies will not be in a position to comply with the June 30, 2016 deadline.

“This year’s monsoon season is the only time window, the plants will get for adding or retrofitting ESPs. Setting up ESP units requires large number of labourers and extensive civil works at the plant. But none of the processes have kicked in,” said an industry watcher.

UltraTech, ACC, Ambuja and Cement Manufactures Association did not comment for this story.

Coal imports jump 34% in 2014-15

Coal imports into India, the world’s third largest buyer, jumped 33.5 per cent in the last fiscal year to 242.4 million tonnes as lower purchases by China depressed prices and helped consumers elsewhere, preliminary data from online trader mjunction showed.

Indian power companies typically depend on imports for about 15 per cent of their annual needs but that figure looks set to climb thanks to a continuous fall in prices, which has raised the appetite for foreign coal.

Imports in March were estimated to have risen 80 percent to 24.73 million tonnes, according to mjunction data based on information from shipping companies, ports and other sources.

Government data on imports generally comes with a lag and varies with those from private firms like mjunction, which collects data from a greater number of ports and includes additional coal grades.

“Going by existing trends and a soft trend in international markets, India’s coal import of all types in 2015-16 would be more than 260 million tonnes,” mjunction Chief Executive and Managing Director Viresh Oberoi said in an email on Tuesday.

Coal Secretary Anil Swarup estimated imports of 200 million tonnes for 2014/15 and 160 million tonnes for the 2015/16 fiscal year.

According to official data, India imported 168.4 million tonnes in 2013/14, while mjunction put the figure at 181.58 million.


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