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Sun, 25th June 2017

Anirudh Sethi Report

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Archives of “coal” Tag

India :April core sector growth slows to three-month low of 2.5%

The growth of eight core sectors declined to 2.5 per cent in April mainly because of lower coal, crude oil and cement productions.

The growth rate of eight infrastructure sectors — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity — was 8.7 per cent in April last year.

According to the government data released on Wednesday, coal, crude oil and cement production recorded negative growth of 3.8 per cent, 0.6 per cent and 3.7 per cent, respectively.
Slow growth in key sectors would also have implications on the Index of Industrial Production (IIP) number as these segments account for about 38 per cent to the total factory output.
Growth in refinery products and electricity output slowed down by 0.2 per cent and 4.7 per cent in April as against 19.1 per cent and 14.5 per cent, respectively in the same period last year.
However, natural gas, fertiliser and steel reported positive growth at 2 per cent, 6.2 per cent and 9.3 per cent, respectively.

China iron ore prices lead industrial commodities lower with 6.7% dip

The price of iron ore in China fell as much as 6.7 per cent on Monday as markets reacted to data showing port inventories of the steel-making ingredient rose again last week.

Iron ore futures contracts traded on the Dalian Commodity Exchange had recovered slightly in afternoon trading to be down 6 per cent at Rmb545.5 per metric tonne.

The drop puts the price of iron ore at the lowest level since January 10 and represents a fall of 17.6 per cent from the most recent intraday peak of Rmb661, seen on on March 16.

Other hard commodities were faring badly in China on Monday as well: Shanghai copper futures were down 1.8 per cent and futures in Dalian for coking coal, used in steel making, dropped 3.8 per cent.

Futures on the Zhengzhou Commodity Exchange for thermal coal, used to generate energy, were down just 0.5 per cent.

Tata Steel closes UK pension scheme

Tata Steel is to shut its £15bn UK retirement fund at the end of this month, in a move that could help safeguard a future for Britain’s largest steelmaker.

The Indian steel giant said on Tuesday that following a consultation with its UK workforce, it would close the final salary scheme to further accrual, after it became a serious financial drag on its British operations.

Last month, thousands of Tata’s UK steelworkers voted in favour of the proposal, which forms part of a rescue plan to put the troubled business on a sounder footing.

China moving to renew coal mining curbs

The Chinese government may reinstate curbs on coal mining lifted last fall, with producers calling for new limits on output amid fears of a coming plunge in prices.

Executives from 19 leading coal companies, among them Shenhua Group, gathered Tuesday for talks at which they agreed to work to prevent a sharp price reversal in thermal coal, which could come in March or April, after the winter heating season ends.

 Behind the scenes, the coal industry is discussing with the government a proposal to reinstate the operating limit on mines, according to people familiar with the matter. That order, waived last autumn, drew the line at no more than 276 days a year.

Thermal coal prices turned upward after the Chinese government early last year set a goal of cutting 250 million tons of annual production capacity and imposed the operating limit. Bigger-than-expected capacity reductions of 290 million tons tightened supply more than the market had bargained for, sending the price to a peak of more than 600 yuan ($87) per ton, 60% higher than at the start of 2016.

In response, the Chinese government lifted the operating curbs and told coal producers to raise output. The tightness in supply has since eased, and coal has been fetching around 590 yuan per ton recently.

India :Eight core industries grow by 5.6% in December

Eight core industries register a growth of 5.6% in December 2016 on the back of healthy output recorded by refinery products and steel.

The growth rate of eight infrastructure sectors — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity — was 2.9% in December 2015.

It stood at 4.9% in November 2016.

The core sectors, which contribute 38% to the total industrial production, expanded 5% in April – December 2016 compared to 2.6% growth in the same period last financial year, according to data released by the commerce and industry ministry today.

Refinery products and steel production jumped 6.4% and 14.9%, respectively during the month under review. However, crude oil, fertliser, natural gas and cement output reported contraction.

Coal output declined by 4.4% in December 2016 from 5.3% in the same month previous year. Similarly, electricity generation too dipped by 6% as compared to 8.8% in December 2015.

US oil output to rise 1.3% in 2017, EIA says

US oil production has turned a corner after a long period of weak petroleum prices, the government said, with volumes rising for the first time since early 2015.

The Energy Information Administration forecast that oil output from the US will increase 1.3 per cent to 9m barrels per day in 2017, abandoning an earlier prediction of a 0.9 per cent fall.

In the first forecast for 2018 in its monthly Short-Term Energy Outlook, the statistical agency said US crude production will rise another 3.3 per cent, or 300,000 b/d, to 9.3m b/d. Production hit bottom last September, EIA said.

Commodity prices show global recovery may be on the horizon

In a major shift in economic trends, prices of raw materials started surging in October, possibly signaling that emerging economies are finally regaining strength after going through a distinctly rough patch.

The shift may be behind the recent stock market rally and the jump in long-term interest rates in the U.S.

 While the surprise outcome of the U.S. presidential election triggered wild movement in stock, bond and currency markets, commodities have been mostly insulated from its impact.
 The CRB BLS Raw Industrial Sub-index, which traces the overall direction of commodity prices, took an upturn early this year after plunging until the end of 2015. The index, a measure of nearly two dozen basic commodities excluding precious metals and crude oil, then began soaring in late October.

Meanwhile, U.S. long-term interest rates shot up after Donald Trump’s unexpected win in last week’s presidential election.

The upswing in interest rates has been attributed by many to concerns over an increase in the U.S. budget deficit due to the president-elect’s campaign promises to both cut taxes and increase public spending.

While such concerns may very well be a factor contributing to higher long-term rates, they do not paint the entire picture. A “bad rise” in the cost of borrowing due to expectations of a government spending spree is not entirely consistent with the rally in the U.S. stock market.

Yields on 10-year treasurys appear to be following the CRB index. The main factor pushing up the CRB commodity prices yardstick is the apparent bottoming-out of key emerging economies.

In China, for instance, investment in electric machinery, publicservice, construction and other sectors is rebounding, shored up by massive government spending on infrastructure.

India -Core sector grows 5% in Sept

India’s core sectors – coal, crude, natural gas, refinery products, fertilisers, steel, cement and electricity – rose 5 per cent in September compared with 3.2 per cent in August.

Data showed the eight core industries grew 4.6 per cent in the April-September period.

With a weightage of some 38 per cent of India’s industrial output, core sector index is seen as a barometer of how India’s industry is doing.

 Steel was the best performer despite the downturn in the global market, reporting a 16.3 per cent growth, nearly as much as the 17-month high of 17 per cent reported in August.

Analysts said the range of tariff protection that India has given to the steel sector from dumping by Chinese and East Asian competitors helped.

“Steel growth shows that demand from downstream industries remains and that they are replacing imports with domestic production,” said Sudipto Bose, an independent steel sector market analyst.

The refinery sector reported the second highest growth rate at 9.3 per cent, while cement, which reflects on downstream construction and infrastructure, showed a 5.5 per cent growth.

However, electricity generation grew just 2.2 per cent while fertiliser grew 2 per cent. Three key sectors – coal, crude and natural gas – contracted. Coal output contracted 5.8 per cent, natural gas output shrank 5.5 per cent, while crude production contracted 4.1 per cent.

India : Tug-of-war over met coke levy

Sharp differences have emerged within the government over imposing an anti-dumping duty on met coke imports from China and Australia, with the commerce ministry pushing for the move and the steel ministry opposing it.

The directorate general of anti-dumping (DGAD), which is part of the commerce and industry ministry, has recommended a duty of $25 per tonne on imports from China and $16 per tonne on shipments from Australia.

Officials said a decision could be expected next week. India had last year raised the import duty on Chinese met coke to 5 per cent from 2.5 per cent.

 Meanwhile, the steel ministry is lobbying for an anti-dumping duty on alloy and non-alloy flat steel products from China and the European Union. Imports of these products have increased four-fold over three years.

The DGAD had initiated an anti-dumping investigation in January following a complaint filed by the Indian Metallurgical Coke Manufacturers Association on behalf of producers such as Saurashtra Fuels, Gujarat NRE Coke, Carbon Edge Industries, Bhatia Coke and Energy and Basudha Udyog.

The companies claimed Australian and Chinese companies were dumping low ash metallurgical coke, and only a levy could save an “otherwise dying domestic industry”.

Foreign funded group wants to stop Adani project in Australia

Adani’s 21.7 billion dollar coal mine project in Australia was being targeted by a “foreign funded, highly orchestrated” group which influenced the traditional land owners and legal environmental challenges’ to stop it, a new set of emails released by WikiLeaks has said.

In a series of emails, it has been disclosed that the US-based Sandler Foundation funded Australia-based environmentalist group, the Sunrise Project, which offered “Wangan and Jagalingou people” financial support and scholarships if they opposed Adani’s mine project and also boasted of its attempts to hide its funding sources from Australian parliament, according to ‘The Australian’ newspaper today.

According to report, the previously secret briefings as part of Hillary Clinton’s campaign chairman John Podesta’s emails, said Sunrise tailored its advice to indigenous communities in northern Queensland, and that the “whole Galilee Basin fossil fuel industrial complex is in its death throes”.

 It was also disclosed that an associated group, Human Rights Watch, offered to help Sunrise Project by keep its tax-exempt charity status because “the mining companies seem to own the Liberals (in Australia) and they play very dirty”.

Human Rights Watch chief executive Ken Roth further disclosed that his group received “charitable status by special parliamentary bill” in the “waning days of the Labor government”.