India's ferroalloys producers have built capacity of 5.25 million tonnes (mt), including 3.2 mt of manganese alloys and 1.75 mt of chrome alloys, anticipating much faster growth in domestic production of carbon, alloys and stainless steel than is actually the case. As a result, every segment of the ferroalloys sector has considerable idle capacity. The sector's attempt to beat overcapacity blues through exports has seen limited success in the face of oversupply of ferroalloys in the global market, thanks largely to Chinese dumping.Ferromanganese is used for desulphurisation and strengthening of carbon steel, while ferrochrome imparts non-corrosive properties to stainless steel.Bansidhar Panda, chairman of Indian Metals & Ferro Alloys (IMFA), says "the chromium sector is at a crossroads, buffeted by rising costs, stagnant prices" and China's overbearing presence in both ferrochrome and stainless steel sectors. Overcapacity is hitting non-integrated producers here, without ownership

Shake-out of ferrochrome industry overdue

Business Standard

The disinvestment target of the government for 2013-14 is Rs 58,000 cr

Restructuring should precede PSU disinvestment

The prices of a wide range of industrial and agricultural commodities have plunged to their lowest since the global financial crisis. While rising supply in the US and decelerating growth in China have dragged down the price of Brent crude oil from 15 fields in the North Sea from a high of $115 a barrel in June to $92, the dollar climbing to a four-year high due to the strengthening US economy is chipping away at gold and silver prices.Of all commodities, iron ore remains the worst performer. In the longest series of losses since Metal Bulletin started compiling data of price movements of the steel-making ingredient in 2009, the mineral has fallen every quarter since the beginning of this year. The drop in the third quarter for benchmark ore (62 per cent iron content) for delivery at China's Qingdao port was 17 per cent, at $78.05 a tonne. The average price of the mineral stood at $135 a tonne in 2013. The loss in ore is a lot more than the 11 per cent retreat in the Bloomberg Commodit

Fall in prices of coking coal, iron ore will aid Indian steelmakers

Steel Authority of India Ltd Chairman Chandra Shekhar Verma is concerned about the fact that in August this year, factory output in China grew the least in about six years. His worries, heightened by a slowdown in China's housing market despite new stimulus measures such as easier mortgages to buy second houses, are shared by many in the Indian steel sector."Considering China's massive steelmaking capacity and the year-on-year rise in production, the mismatches between domestic demand and supply could lead to a marked rise in steel exports. This is proving to be upsetting for steelmakers in countries where Chinese products are shipped in volumes," says Verma.China is reported to have shipped 52.4 million tonnes (mt) of steel in the first eight months of this year, up 36 per cent compared to the year-ago period. And, India has started feeling the pinch. Between April and August, Indian steel imports rose 23 per cent year-on-year. The slowdown in demand from the housing and construction

Chinese long-steel imports distorting Indian market

That low global sugar prices aren't allowing production-cost recovery is forcing the beleaguered Brazilian sugar sector to be trimmed

Making ethanol from cane juice to trim sugar surplus

In his two earlier stints as chief minister of Andhra Pradesh, Chandrababu Naidu had turned the once sleepy capital city of Hyderabad into a major information technology hub. His impressive work was praised by many world leaders, including Bill Clinton and Tony Blair.Back in power after 10 years, Naidu has taken up the daunting task of opening bauxite mines in the state, amid opposition from various sections of society, political parties and Maoists.Andhra Pradesh has the potential to emerge as a major centre of alumina and aluminium production, next only to Odisha. Of India's bauxite resources of 3.48 billion tonnes, Andhra Pradesh accounts for 18 per cent. As much as 52 per cent of the resources are found in Odisha, where the country's three aluminium groups-Hindalco, Vedanta and National Aluminium Company (Nalco) - are engaged in capacity expansion. These two major bauxite-owning states are facing a common and intractable problem of arriving at a consensus among all stakeholders, in

Can Chandrababu Naidu start bauxite mining in AP?

A public sector undertaking (PSU) is under compulsion to increase production year-on-year, irrespective of the state of the market. Braving this, National Aluminium Company (Nalco) Chairman Ansuman Das kept 335 of the 960 pots at its smelter idle during 2013-14. As a result, production stood at 316,000 tonnes, against 403,000 tonnes in 2012-13 and the all-time high of 444,000 tonnes in 2010-11. The production, however, finds justification on London Metal Exchange (LME) prices remaining stubbornly low last year and India recording 'negative growth' in aluminium demand. At one point last financial year, aluminium prices fell below $1,700 a tonne, leaving swathes of global smelting capacity unviable.The main cost component of aluminium production is power. Nalco can restrict the share of energy in its total production cost to 32 per cent by using "mostly linkage coal" for power generation. With the company seeing futility in running its captive power plants with imported and auctioned coa

Time ripe for Nalco to raise production?

Zinc, primarily used for rust-proofing steel, has emerged as the most attractive of the six principal industrial metals traded on the London Metal Exchange (LME.) At a three-month price of $2,375 a tonne, zinc, the target of rising fund activity, is up 14 per cent this year. In LME's maiden report on 'commitment of traders', of the long positions held by money managers at the beginning of August, zinc accounted for about 30 per cent of the total contracts outstanding. This compares with open interest positions of 23.5 per cent for nickel, 24 per cent for copper and 25 per cent for aluminium.Why has zinc come to enjoy this huge confidence among money managers? Having crossed the technical resistance level of $2,200 a tonne a while ago, a price of up to $2,600 a tonne is now within the sight of bull operators. No doubt, fundamentals have provided an opportunity to zinc bulls. After a surplus of six years, coinciding with world major economies struggling for a breakout from recession, a d

Amid rising deficit, money managers favour zinc

Former president George Bush enacted laws that set minimum prices for biofuels and required refiners to step up annual sales

Promise of partial energy security in ethanol blending

India is the world's fourth-largest importer of natural gas, accounting for six per cent of the global market

Abundant supply keeps oil prices low

In 2007, the height of the global commodities boom, Aditya Birla Group Chairman Kumar Mangalam Birla and Tom Albanese, chief executive of Vedanta Resources chief executive and former chief executive of Rio Tinto, made landmark purchases of aluminium assets. Ignoring the advice of his colleagues at Hindalco, Birla acquired the 2005 Alcan spin-off Novelis, the world's largest manufacturer of aluminium rolled products such as can stock and industrial sheets. He knew there would always be money in downstream value-added products, unlike primary aluminium, which is subject to major price swings.At $6 billion, the investment looked stiff. But Birla stands vindicated, considering the post-takeover working of Novelis and its high-end aluminium rolling technologies for application in automobiles, aerospace and packaging.For Albanese, however, the $38-billion acquisition of Alcan on expectations the demand from China and other emerging nations would sustain the demand for metals turned sour, wit

Aluminium outlook improves on rising deficit

ArcelorMittal remains an exception in the global steel sector, as ahead of the recession, it had emerged as a global steel behemoth

ArcelorMittal benefits from steel demand rise, restructuring

"Arbitrariness" and "inefficiency" in allocation of coal blocks to private and public sector companies, which led to revenue losses for the government, put the UPA in the dock

Allocating natural resources remains a challenge

India, very rich in iron ore, is becoming a major importer of the steel-making ingredient

Indian setback helping global iron ore miners

Chandra Shekhar Verma was made chairman of Steel Authority of India Limited (SAIL) in June 2010, an inflection point for the company. Capacity expansion and modernisation of SAIL's steel mills and captive mines had started gaining pace, but left room for Verma to increase focus on induction of new technologies, raise the share of value-added products in saleable steel production and build raw materials security for a much larger steel production base.Unlike India's other leading steel groups, SAIL operations are multi-centric, with four integrated mills, three special steel units and a ferroalloys plant. More, it operates mines in more than a state. Verma is using the Rs 72,000-crore investment in capacity expansion and modernisation as a learning curve for the bigger task ahead of achieving hot metal production of 50 million tonnes (mt) by 2025. In the World Steel Association (WSA)'s chart for 2013, SAIL is 26th, with yearly crude steel production of 13.5 mt. Except ArcelorMittal (pro

SAIL has to focus on value addition

Due to imports and bumper production since 2010-11 leaving huge stocks with mills, in January, the ex-factory price of sugar collapsed to Rs 750 a quintal less than production cost

Bad economics remains the bane of sugar sector

Much to the relief of aluminium producers, the white metal has outperformed other non-ferrous metals in price gains, except nickel, which managed to advance 40 per cent after Indonesia put a ban on minerals exports in January.The three-month aluminium price, which in some intraday trades at London Metal Exchange (LME) breached the psychologically important $1,900 a tonne, has risen to its highest since August 2013. The undoing of aluminium for a long time has been excess capacity outside China and its use leading to the build up of stocks of over 5 million tonnes (mt) at LME warehouses. Equally big, if not larger, inventories are held at non-LME storehouses. Such large stocks coincided with major demand slump for all metals in the world's leading economies struggling to come out of recession. No wonder, aluminium, the second-most used metal after steel, crashed to a four-and-a-half-year low of $1,675 a tonne in February.National Aluminium Company (NALCO) chairman Ansuman Das, however,

Aluminium outperforms other metals except nickel

The geographical shift in steelmaking capacity to emerging economies since the 70s has now picked up greater force in the automobile sector. In the global steel production of 1.607 billion tonnes (bt) in 2013, the share of Asia (1.08 bt) was 67.3 per cent, thanks largely to China, with output of 779 million tonnes (mt). As in steel, in the global automobile segment, too, China dominates. Last year, it accounted for production of 22.17 million units out of the global output of 87.3 million units. The geographical shift is best illustrated by a study that says in the expected global market growth of 33 million cars between 2007 and 2020, as many as 32 million units are to come from developing economies. That China will have the largest share in that growth is a given.Through the past couple of years, India's steel and automobile sectors could not perform to their potential because of the economy's sub-five per cent growth. Consulting firm Booz & Co, however, says through the next 20

Steel and aluminium in joust for auto space

At a three-month forward price of $6,730 a tonne at the London Metal Exchange (LME), copper has fallen about 10 per cent so far this year. The fall is principally attributed to two factors: First, the World Bank has scaled down its forecast for global growth from 3.2 per cent to 2.8 per cent, as the fact that the US, China and Russia are likely to report weaker growth than expected is leading to worry among operators. But what is leaving a bigger impact on the market is Beijing looking closely at fraudulent financing deals using metals, principally copper and iron ore, stored at warehouses at the Qingdao and Penglai ports.This is seen as part of Chinese Prime Minister Li Keqiang's drive to curb shadow banking. A trained economist, Li wants to keep shadow banking under check, before the country faces its 'Lehman moment'. What is probably worrying him the most is the ballooning of lending, which, according to Standard Chartered Bank, is 231 per cent of gross domestic product (GDP), and a

Chinese probe into shadow banking spooks copper market

The UN's Food and Agriculture Organization says India lets as much as 40 per cent of its fruit and vegetable production go to waste

Curbing horticulture products' wastage in farm-to-fork transfer

A likely positive for the steel sector is an improvement in rural demand, in the wake of 4.7% growth in agricultural production in 2013-14

Kunal Bose