Metallica: Steel prices find ground, base metals not yet

“As anticipated, steel prices saw some recovery during the last fortnight (ending August 15th) while, base metals prices remained volatile. Steel raw material prices fell further with iron ore prices falling by ~3.5% and coking coal declining sharply by 10%. Believe rise in steel prices can’t sustain without rational capacity utilization in getting sync with the demand. Base metals resumed their fall after recovering earlier during the last fortnight. We believe overall volatility to continue in metals prices amid uncertainty in Europe and lack of clarity on Chinese policy actions”

Ferrous: Steel prices seem stabilized; RM prices likely to follow

• The CIS Black Sea (FoB) HRC export prices continued to recover during the last fortnight and rose by ~2% to US$565/ tonne. Improvement was also seen in North American domestic HRC prices, which rose by 7% during the same period to US$660/ tonne. European domestic HRC prices remained flat at €506/ tonne, while world HRC prices softened slightly (~1%) to US$633/ tonne.
• Iron ore prices slipped further to their new lows with 63%, 62% and 58% Fe grade ore (Indian origin) falling by ~3.5% each to US$119, US$113 and US$104/ tonne during the last fortnight; China domestic coking coal (1st grade) prices slipped 10% to US$236/ tonne. Believe following some improvement in steel prices RM prices also should see some stability in the near term.

• Volatility continues in base metals, as the prices recovered quickly during the first five days only to fall again towards the end of the last fortnight.
• All the major base metals prices eased further on a closing basis; copper, aluminium,  zinc and lead prices on LME declined by 3%, 3%, 4% and 6% respectively to  US$7386, UD$1803, UD$1782 and US$1835 respectively during the fortnight
• Global economic situation and movement in USD index (82,7) would be key to watch.

• The Goa govt. came up with a draft mining policy to impose an ad hoc limit of 45 mt (includes dump exports to be capped at 25 mt) of total ore transportation on public roads. An expert panel would study the fresh mining permits to be granted in future.
• The SC approved restarting of 16 mines in Karnataka - 13 ‘A’ and 3 ‘B’ category mines as recommended by CEC subject to MoEF clearances. These are allowed to produce 8.2 mt against earlier capacity of 26.5 mtpa (Sesa allowed 2.9 out of 6 mtpa).
• Vedanta Resources has convened General Meeting of shareholders on 28 August 2012 at London w.r.t. acquisition of minority interests in Hindustan Zinc and BALCO on its own or through subsidiaries.
• Tata Steel and Hindalco reported their Q1FY13 results which were broadly in line with expectations. While Indian operations for both were impacted by high fixed costs, overseas subsidiaries performed better than expectations. While Tata Steel Europe reported an EBITDA/tonne of US$35, adj. EBITDA/tonne for Novelis rose to US$359