Mining sector seeks lower tax, export duty exemptions

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The Federation of Indian Mineral Industries (FIMI) has sought rationalisation of tax on mining, and exemption from export duties on iron ore and bauxite.

In a press statement before its 52nd Annual General Meeting, the industry body said taxes and royalty for mining in India are the highest in the world.

“Effective Tax Rates (ETRs) work out to be as high as 64 per cent for the existing mines and 60 per cent for the auctioned mines. Apart from the ETRs, there are hosts of other taxes, levies and cess due to which total financial burden goes beyond 100 per cent of the cost of mineral production,” the statement said.

“There is, therefore, a need to rationalise the taxation structure for the mining sector for sustainable development and deriving long term benefits in terms of sustained raw material security,” the statement added.

FIMI also called for a reduction of export duty on iron ore. The statement said, “Since there is no domestic demand for iron ore with up to 62 per cent iron (Fe), the only alternative is to export. The export duty on more than 58 per cent Fe grade is 30 per cent ad valorem which makes exports unviable. Hence, FIMI reiterates that export duty on iron ore up to 62 per cent Fe should be removed completely, particularly iron ore of Jharkhand and Odisha.”

FIMI also said an export duty of 15 per cent is charged on bauxite. “A number of small bauxite mines in the State of Gujarat and Maharashtra have been closed or are operating at very low capacities. The quantum of exports of bauxite which had peaked to 8.91 million tonne during 2015-2016 has now sharply declined to about 1.5 million tonne. Considering that this low grade of bauxite is not suitable for the domestic aluminium industry, it would be prudent that we encourage the exports of such bauxite by removing the export duty,” the statement said.

Source: THE HINDU BUSINESSLINE

China’s NDRC warns high steel margins mean meeting 2018 capacity cuts not “easy”

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China cut 80 million tonnes of coal production capacity and 24.7 million tonnes of steel capacity from January to July 2018, an official from the National Development and Reform Commission (NDRC) said at a briefing on Thursday.

The state economic planning agency said in March it aimed to reduce coal capacity by around 150 million tonnes and steel capacity by around 30 million tonnes for the whole of 2018.

The state planner warned that China is facing “significant pressure” of outdated steel capacity being revived as industry profits surge.

It also said completing steel capacity cut target is “not an easy task”.

According to industrial analysts, profit margins at Chinese steel mills are at 1,100 yuan ($159.13) a tonne, near the record levels of last December

Source: REUTERS

China churns out most steel ever as prices hit six-year high

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China, supplier of more than half the world’s steel, produced a record amount in July as mills boost runs to benefit from healthy margins amid a boom in prices to the highest level in six years.

Output of crude steel climbed 7.2 percent on year to 81.24 million metric tons, according to data from the National Bureau of Statistics on Tuesday. The daily rate was 2.62 million tons versus an all-time high of 2.673 million tons in June. Production rose 6.3 percent to 532.9 million tons in the first seven months. Aluminum output virtually matched an all-time high.

China’s steel mills are smashing output records by pushing furnaces beyond typical limits, offsetting closures, according to Goldman Sachs Group Inc. Margins are high as prices rise and policy makers vow to boost infrastructure investment, brightening prospects for demand, just as inventories slide.

While China has trumpeted reforms in the past two years that have shuttered aging and illegal plants, and curbed winter output in the most polluted cities, official data shows output rising. That’s partly because mills are using iron-rich ores to boost productivity, and raising the portion of steel scrap in their feed-stock, according to Goldman’s Hong Kong-based analyst Trina Chen.

At the same time, producers are facing increased risks from an intensifying trade war between the U.S. and China and a potential economic slowdown. Exports shrank 14 percent to 41.3 million tons in the first seven months of the year, according to customs data last week.

Output of primary aluminum jumped 12 percent on year to 2.93 million tons in July, almost matching the record level in June 2017, bureau data show. Production in the first seven months increased 3 percent to 19.4 million tons.

Source: BLOOMBERG

Tata Steel Q1 profit doubles to Rs 1,934 cr on strong Europe, India growth

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Tata Steel’s first quarter consolidated profit more than doubled to Rs 1,933.8 crore compared to Rs 921.1 crore in the corresponding period last fiscal, driven by growth across the board.

Revenue during the quarter grew by 27.6 percent to Rs 37,832.8 crore from Rs 29,657.3 crore in year-ago, led by growth in all subsidiaries on strong steel demand.

“Tata Steel delivered strong performance across all geographies on the back of strong steel demand and buoyant spreads,” T V Narendran, CEO & Managing Director said.

“All verticals saw strong growth, with automotive and branded products segments now contributing to 19 percent and 33 percent of total volumes, respectively,” Narendran said.

Tata Steel’s EBITDA (earnings before interest, tax, depreciation and amortisation) increased 30 percent year-on-year to Rs 6,467.6 crore and margin expanded by 30 basis points to 17.1 percent in Q1.

Better realisations and improved operational efficiencies in India business, and higher selling price and better operational performance in Europe boosted consolidated EBITDA. India EBITDA per tonne stood at Rs 17,252.

Narendran said company expects underlying steel demand to be strong, particularly in India. “However, the rising trade tensions and the impact on the global economic momentum is a cause of concern.”

Tata Steel Europe’s revenue increased 17 percent year-on-year to Rs 16,429.31 crore with EBIT (earnings before interest and tax) rising 33 percent to Rs 1,666.21 crore for the quarter ended June 2018.

Tata Steel Europe (TSE) also saw stronger profitability with an improvement in spreads and operational performance, Narendran said.

TSE deliveries improved by 1.9 percent YoY to 2.45 million tonnes in Q1FY19, however, declined by 3.8 percent QoQ in seasonally weaker quarter.

Company’s standalone profit shot up 358 percent year-on-year to Rs 2,318 crore and revenue increased 26 percent to Rs 16,405.5 crore in Q1FY19. EBITDA surged 75 percent to Rs 5,118 crore and margin expanded 883 basis points to 31.2 percent compared to year-ago.

Tata Steel India’s total deliveries grew by 7.9 percent YoY to 2.97 million tonnes in Q1FY19; domestic deliveries grew by 13.7 percent YoY, much stronger than 9.2 percent YoY overall steel demand growth in India, the company said.

CNBC-TV18 poll estimates by analysts had expected consolidated profit at Rs 2,587.4 crore on revenue of Rs 35,856 crore and EBITDA at Rs 6,830 crore with margin at 19 percent for the quarter.

Source: MONEYCONTROL

Steel-makers seek 40% export duty on graphite, removal of dumping duty on imports

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The steel industry has urged the government to levy export duty of 40 per cent on graphite electrodes, one of the key raw materials, to improve domestic supply and bring down prices. The industry also wants the government to remove the country-specific high anti-dumping duty of $238 -900 a tonne levied on graphite imports.

The levy of anti-dumping duty and strong demand has pushed up domestic graphite electrode prices by over five times in the last three years to $15,000 a tonne, from $2,350 a tonne in June 2015. The rise in graphite prices has pushed up steel making cost by about ₹1,500-1,700 per tonne.

Bhaskar Chatterjee, Secretary General, Indian Steel Association, said it is important that export of graphite electrodes is restricted given that the Indian steel industry is at the crossroads and several steel producers are going through insolvency proceedings.

To tide over the present situation, he said both the anti- dumping duty and the customs duty on imports of graphite electrodes should be temporarily put in abeyance till the balance between demand and supply is restored globally.

Ravi Jhunjhunwala, Chairman and Managing Director, HEG, one of the largest graphite manufacturer, said the graphite prices are going up due to strong demand and not due to short-supply. He said the rise in graphite price has pushed up steel making cost by 6 per cent from 2 per cent and is surprising that steel companies are not targeting the rise in cost of other raw materials.

Graphite exports from India, which accounts for 24 per cent of global supply, are expected to touch ₹9,000 crore this year compared to ₹1,800 crore, said Jhunjhunwala.

The shifting of 60 million tonne steel production from blast furnace to electric arc furnace post shutdown of pollutant blast furnaces in China has pushed up demand for graphite across the globe. Graphite electrodes are used in steel making as a heating element. Every tonne of steel produced through electric arc furnace requires about 2 kg of graphite electrodes. Graphite electrodes production is dominated by only two companies Graphites India and HEG Ltd.

Source: THE HINDU BUSINESSLINE

Steel imports from Japan, South Korea surge

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India is being hit by a wave of steel from producers in Japan and South Korea, a government document showed, as mills there redirect supply after U.S. President Donald Trump slapped an import duty on the alloy earlier this year.

During the first quarter of the fiscal year starting in April, India’s steel imports from South Korea rose 31% from a year earlier, while those from Japan climbed 30%, according to an internal document from the Ministry of Steel that was reviewed by Reuters.

The flood of imports is so big that the government in New Delhi is considering measures to control imports, Minister Chaudhary Birender Singh told Reuters.

“The concern is there, of course, and if we are to take some measures, we will not hesitate on that account,” Singh said in an interview.

Between April and June, India became a net importer of steel, with foreign supplies reaching 2.1 million tonnes, 15% higher than a year earlier, according to the note.

With the increase, the South Asian nation has now passed the United States as South Korea’s third-largest market for steel, according to data from the Korea Iron & Steel Association.

New Delhi could look at imposing safeguards, said a senior government official, who did not wish to be identified in line with government policy. Under World Trade Organization rules, safeguards are temporary restrictions on imports of a product to protect a domestic industry.

Renewed measures

However, renewed government measures would take place despite India’s domestic steel industry being unable to meet the country’s demand for high-end steel products needed for railroads and structural steel used in construction projects.

India’s imports of steel products used by railways rose to more than 18,000 tonnes during the April to June period compared with 500 tonnes a year earlier, the Steel Ministry note said.

Imports of steel products used in construction more than doubled to nearly 22,000 tonnes during the same period, the note said.

The United States imposed tariffs of 25% on steel and 10% on aluminium imports in March.

South Korea was the fourth-biggest steel exporter to the U.S. and Japan the tenth largest, the Steel Ministry said in a report in April.

Indian steel manufacturers are also impacted by the tariffs and the country will retaliate with duties on products from the United States that will take effect from September.

Source: REUTERS

JSW emerges top bidder for Bhushan Power and Steel

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JSW Steel has emerged as the highest bidder for the stressed assets of Bhushan Power and Steel, relegating Tata Steel to the third position after Liberty House.

On Monday, JSW Steel also revised its bid from the earlier Rs19,000 crore to Rs19,700 crore, while Tata Steel surprisingly retained its initial bid of Rs17,000 crore. UK-headquartered Liberty House increased its bid by Rs500 crore to Rs19,000 crore, reports quoting sources close to the development said.

Tata Steel had emerged the winner in the first round of bidding. But the National Company Law Appellate Tribunal (NCLAT) directed Bhushan Power’s Committee of Creditors (CoC) to go for rebids after the other firms offered to raise their offers.

Tata Steel had since appealed to the Supreme Court against the NCLAT decision to consider revised bids. However, the apex court refused to stay the NCLAT order.

The CoC will now submit the leading bids — of JSW Steel and Liberty House — to NCLAT, which will then approve the highest bidder’s proposal on 17 August .

JSW Steel has also provided SBI’s guarantee to fund the acquisition.

With the buyout of Bhushan Power, JSW Steel will retain its position as the country’s largest private sector steel producer with a capacity of 22 million tonnes per annum while Tata Steel, with a capacity of 19 mtpa, will remain the second largest.

Tata Steel had earlier acquired Bhushan Steel through the Insolvency and Bankruptcy Code (IBC) process.

Once JSW acquires the assets of Bhushan Power, it can enhance its steelmaking capacity to 5 mtpa from 3.5 mtpa with an investment of Rs1,500 crore.

Earlier, Tata Steel had beaten JSW Steel to bag the 5 mtpa capacity Bhushan Steel with its bid of Rs35,000 crore. JSW Steel, on the other hand, had acquired Monnet Ispat and Power for Rs2,800 crore.

Bhushan Power and Steel is a producer of flat and long steel products, with plants located in Chandigarh, Derabassi, Kolkata and Odisha.

Source: DOMAIN-B.COM

India’s steel demand to grow 10-11 percent by 2021

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Demand for steel in India is likely to see an annual growth of 10-11 per cent over the next three years, buoyed by a firming trend in the construction sector, among other factors, an official said.

“Going forward we have the potential of domestic steel demand growing at 10-11 per cent for another three years consequently if nothing extraordinary happens. But in normal circumstances I would expect that,” Joint Plant Committee(JPC) Chief Economist A S Firoz told PTI.

Domestic steel demand grew at 8 per cent in the first quarter of 2018-19, he said. “Given the kind of movement that is happening in the industries which consume steel, given the kind of momentum that has been built up in the construction industry. All this will raise steel demand significantly,” he said.

He noted that industries like two-wheeler and auto are getting shaped up that will raise domestic steel demand in a big way. Replying to a question, Firoz said the global trade conflict will not have any immediate impact on the Indian steel market. US President Donald Trump has imposed 25 per cent import tariff on steel and 10 per cent on aluminium. However he said there are few constraints to steel production.

“One kind of constraints is that we may not have the kind of products that are in demand, there might not be domestic capacity. So when you don’t have domestic capacity, you have a problem of meeting those demands. Imports will come in,” he said.

World Steel Association had earlier said that in India, steel demand is expected to accelerate gradually, mainly driven by public investment. Empowered by Ministry of Steel, JPC is the only institution which collects data on the Indian iron and steel industry.

Source: TELANGANA TODAY

Japan’s export growth slows as U.S.-bound car shipments fall

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Japan’s export growth slowed in July, with shipments of cars to the United States sinking and as global trade disputes cast doubt over demand for products from the world’s third-biggest economy.

Exports rose 3.9 percent from a year earlier, Finance Ministry data showed on Thursday, well below the 6.3 percent increase forecast by economists in a Reuters poll and slowing from June’s 6.7 percent increase.

Japan’s exports to the United States fell 5.2 percent, a second straight decline, paced by a 12.1 percent fall in car shipments.

There were no immediate signs that trade tensions with Washington have affected Japan’s auto sector, but analysts say external risks are increasing.

“While caution is heightening over U.S. trade policy, U.S. car sales are leveling off, causing Japan’s car exports to the United States to level off as well,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

“If capital outflows from emerging economies accelerate on top of this, it would cause a marked slowdown in the global economy, further weighing on Japan’s exports.”

President Donald Trump is pressing Japan and other nations to reduce their trade surpluses with the United States and has threatened to raise tariffs on the critical auto sector after raising them on steel and aluminum.

Japanese carmakers have shown no sign, though, of rushing to boost car shipments to the United States in anticipation of higher levies.

Imports from the United States rose 11.0 percent in July, led by crude oil, motors and liquefied petroleum gas.

As a result, Japan’s trade surplus with the United States fell 22.1 percent year-on-year to 502.7 billion yen ($4.55 billion).

Exports to China, Japan’s largest trading partner, rose 11.9 percent in July from a year ago.

Shipments to Asia, which account for more than half of Japan’s overall exports, rose 8.0 percent, led by semiconductor production equipment and electronics parts for China and sales of steel to Thailand.

Overall imports rose 14.6 percent in the year to July, roughly matching economists’ median estimate, resulting in a trade deficit of 231.2 billion yen, vastly exceeding the expected 50 billion yen.

Thursday’s trade figures came after gross domestic product (GDP) data last week showed Japan’s economy, the world’s third largest, rebounded in the second quarter from a January-March dip.

Japan’s economy grew at an annualized rate of 1.9 percent in the second quarter on the back of household and business spending, recovering from an earlier contraction.

Source: REUTERS

US economy is expected to accelerate this year, then slow in 2019: CBO

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U.S. economic growth will probably accelerate this year before slowing in 2019 to well below the Trump administration’s 3 percent target as a fiscal stimulus fades, congressional researchers projected on Monday.

In an updated economic outlook, the nonpartisan Congressional Budget Office (CBO) projected that inflation adjusted or real gross domestic product (GDP) would grow 3.1 percent this year, exceeding 2.2 percent growth in 2017 due to lower income taxes, increased government spending and private investment.

The government slashed corporate and personal income taxes in January in a $1.5 trillion package and the U.S. Congress passed a $1.3 trillion spending bill in March.

This has buoyed consumer and business spending as well as government outlays, which combined with accelerated soybean exports to lift the economy to a 4.1 percent annualized rate in the second quarter from a 2.2 percent pace in the January-March period. The April-June growth rate was the highest in nearly four years.

But the CBO said it expected growth to slow in the second half as jolts to consumer spending and agricultural exports either fade or reverse. For instance, some second-quarter soybean exports were aimed at beating Chinese tariffs that took effect in July and cut future shipments.

“In 2019, the pace of GDP growth slows to 2.4 percent in the agency’s forecast, as growth in business investment and government purchases slows,” CBO director Keith Hall said in a statement.

Republicans have said the tax cuts, which increased the nation’s debt, would pay for themselves through strong economic growth. The Trump administration has said the economy can sustain 3.0 percent growth over the long term, an assertion many economists have disputed.

The CBO also cautioned that trade tensions could make a bigger dent on GDP growth than anticipated. An escalating U.S.-China trade war could result in tariffs on all goods traded between the world’s two largest economies.

Washington also has traded tariffs with the European Union, Canada, and Mexico.

“When CBO completed this economic forecast in early July, the agency estimated that the macroeconomic consequences of the U.S. tariffs and foreign retaliatory tariffs that had been implemented at that time would be small,” said Hall.

Tariffs then “affected goods that accounted for less than 1.5 percent of the total value of U.S. trade. However, trade policy has already changed since early July and may continue to evolve, so the effects of new tariffs may become more substantial and have a larger effect on the economy than CBO accounted for in its current projections.”

From 2023 to 2028, the CBO forecast the economy growing by about 1.7 percent each year.

Source: REUTERS