Tag: steel

ICICI Pru AMC’s Anand Shah is bullish on steel despite 2023’s underperformance — here’s why

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Anand Shah, Head of Portfolio Management Services (PMS) and Alternative Investment Funds (AIF) Investments at ICICI Prudential Asset Management Company, on Monday (March 4) said metals were a laggard throughout 2023.

He attributed this underperformance to challenges faced by China, the largest consumer and producer of steel, particularly in the real estate sector.

Despite the challenging year, Shah expressed optimism about steel, emphasising the reasonability of valuations.

While talking to CNBC-TV18, he said ICICI Pru AMC has been overweight on steel and expects a positive shift in the industry’s global profitability over the next decade.

Shah noted that as China prospers, its competitiveness in the international market is likely to diminish, especially as it transitions from blast furnace to electric arc furnace, making it less competitive on pricing.

It must be noted that shares of steel companies fell on Monday after CLSA downgraded certain stocks with stretched valuations and weaker industry spreads compared to their nemesis.

Further, commenting on the broader market trends, Shah acknowledged the performance of state-owned businesses and banks over the last 3-4 years.

He attributed their success to valuation comfort, making them relatively cheaper than the overall market.

However, he cautioned investors to be mindful of both market upsides and downsides.

Shah observed that recent rallies in cyclical stocks, driven by superior earnings growth rates during an upturn, also come with the risk of sharp earnings degrowth.

The ICICI Pru AMC’s head of PMS and AIF Investments further underscored the importance of stock picking in the current market scenario.

He stressed on the need for investors to be selective in choosing the right segments and companies within those sectors.

“Investors should consider both the upside and downside risks, given the evolving dynamics in the market and individual stocks,” he told CNBC-TV18.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

‘India’s monthly steel exports at 18-month high in January, reaching 1.1 million tonne’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s monthly steel exports hit an 18-month high to 1.1 million tonne in January 2024 on increased demand from the European Union and supportive global prices, SteelMint said.

Besides, competitive domestic prices of steel contributed to a rise in exports, the research firm said in its latest report.

The outbound shipment of steel in January 2023 was 0.67 million tonne, as per SteelMint data. On reasons behind the surge in exports, SteelMint said, “Good restocking demand from the European Union (EU) contributed 67% of the 1.11 MT (export) in January. It was highest in last 18 months.”

While the price of the hot rolled coil (HRC) in India’s trade segment was at ₹54,300/tonne, the global rate was $710 per tonne (about ₹58,000). This factor also contributed to the demand for Indian steel in the global markets.

Overall, Indian steel exports may remain largely range-bound or fall slightly in the near term because of the “global trade lull induced by the Chinese lunar holidays and Tet festival in Vietnam,” SteelMint said.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Indian steel mills seek Iron Ore export ban as China sales jump

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Smaller steelmakers in India are pressing for a ban on exports of iron ore, after a surge in sales to Chinese mills pushed up local prices.

Indian exports jumped 170% to 44 million tons last year — most of which went to China — at a time when domestic demand for the raw material is rising. That’s prompted the worst-affected sections of the industry to seek restrictions from the authorities to protect their margins.

“We have asked the government to ban exports of all forms of iron ore — otherwise China’s steel industry will run and ours will shut,” Anil Nachrani, president of the Chhattisgarh Sponge Iron Manufacturers Association, said in a phone interview this week. “India should be an exporter of steel and not iron ore,” he said.

Nachrani said smaller mills in at least five major manufacturing states have banded together to lobby the steel ministry after many became loss-making. Second-tier producers, which account for about 40% of nationwide output, have been paying almost four times more than bigger operations, he said. India’s top mills can negotiate better prices for inputs like iron ore and coal and often have their own mines.

Any move by India to limit exports could underpin iron ore prices, one of the worst-performing major commodities so far this year. The government has stepped up in the past to safeguard the interest of local producers. In May 2022, it imposed a 50% export tax on all grades of iron ore to reduce costs and improve supply. The measure was withdrawn six months later.

India’s steel ministry didn’t immediately respond to an emailed request for comment.

The growth in capacity at India’s big steelmakers has boosted demand locally and intensified competition for the material at auctions and in the open market. But at the same time, end-user demand for steel remains soft, which is squeezing margins for smaller players.

“Demand has been weak on the one hand, and on the other hand they are not able to compete with major producers who have captive coal and iron ore mines,” said Deependra Kashiva, director general at the Sponge Iron Manufacturers Association, a national body.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India bats for local production of corrugated steel to increase manufacturing of containers

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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With the Red Sea conflict causing an increase in insurance and freight rates globally, Indian exporters are exploring ways to mitigate the impact of extended turnaround times for shipping vessels and containers. This is due to ships opting for a longer route around Africa’s Cape of Good Hope instead of the usual Suez Canal route.

Noting a rise in the Drewry Freight Index attributed to increased freight costs, Dr. Ajay Sahai, the DG and CEO of the Federation of Indian Exporters Organization (FIEO), emphasised the necessity for more containers for coastal shipping to avoid repositioning charges.

While acknowledging that manufacturing of shipping containers is already underway in Bhavnagar, Gujarat, by various private companies, he urged for backward integration and local production of corrugated steel used in containers—a component not currently produced in India.

Dr. Sahai clarified that the impact of the Red Sea conflict on insurance costs doesn’t arise until shipments reach importers. He mentioned that few insurers in India provide cargo insurance, and the role of ECGC becomes significant during global liquidity crunches.

Highlighting that major companies like IKEA and Walmart have pre-negotiated and discounted contracts with shipping companies, he pointed out that shipping companies often recover losses from smaller exporters and suppliers when there’s a nomination involved.

In opposition to the current losses borne by Indian exporters, he recommended tax concessions to attract global shipping lines to India by incentivising the registration of shipping vessels under the Indian flag.

Sahai drew attention to China’s artificial lowering of product prices in areas where India has implemented PLI schemes.

He advocated for an increase in Rupee trade, citing instances where Rupee payments have commenced in trade with Russia, UAE, and Sri Lanka. Stressing the importance of facilitating the supply of goods to India in Rupees and encouraging the use of available Rupees among global traders, he mentioned that some global suppliers of sunflower oil have agreed to trade in Rupees.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

US Steel sale may deserve serious scrutiny, says White House

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The purchase of United States Steel Corp by a Japanese company “appears to deserve serious scrutiny,” President Joe Biden’s top economic adviser said, the latest sign of political pressure over the deal.

Nippon Steel Corp on Monday announced it would buy US Steel for $14.1 billion to create the world’s second-largest steel company. But the proposed acquisition has drawn concern or outright opposition from prominent Democrats and union leaders with longtime ties to Biden.

“The purchase of this iconic American-owned company by a foreign entity — even one from a close ally — appears to deserve serious scrutiny in terms of its potential impact on national security and supply chain reliability,” Biden economic adviser Lael Brainard said in a statement Thursday.

US Steel is proactively seeking a national security review in a bid to calm opposition. Approval by the Committee on Foreign Investment in the United States, or CFIUS, is a condition of its deal, according to a filing with the Securities and Exchange Commission.

The administration “will be ready to look carefully at the findings of any such investigation and to act if appropriate,” Brainard said.

Nippon Steel told Bloomberg News on Monday it is confident on clearing regulatory hurdles, pointing to Japan’s strong relationship with the US.

“I don’t have any concern about passing CFIUS,” Nippon Steel Executive Vice President Takahiro Mori said. Later that morning in a conference call, US Steel Chief Executive Officer David Burritt told analysts he did not believe the deal would face any problems receiving approval from regulators.

Biden is facing demands in 2024 battleground states in the nation’s industrial heartland to scrutinize the sale or block it altogether. Pennsylvania’s two senators, both Democrats, wrote Treasury Secretary Janet Yellen, who leads the CFIUS process, saying the deal should be killed.

The proposed merger strikes at two pillars of Biden’s political identity: his claim to be the most pro-union president in US history and to be a trust-buster.

The United Steelworkers of America has urged regulators to review the deal to determine if it benefits workers and serves US national security interests, union President David McCall said in a statement. McCall on Thursday praised Brainard’s comments about the deal’s effects on the company’s unionized workforce.

“Our union shares many of the concerns expressed in today’s White House statement, including how this deal may impact the future of domestic steel production,” McCall said.

Biden’s new rules designed to crack down on mergers could also be put to the test by the US Steel sale. The Justice Department and Federal Trade Commission on Monday finalized sweeping new guidelines meant to prevent companies seeking to dominate their industries by snapping up rivals.

Also Read: Japan’s cooling inflation also offers encouraging signs for the BoJ

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Steel Ministry holds review meeting on surging steel imports from China, Vietnam

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government has reviewed the steel import situation amid concerns raised by the domestic industry over the increased inward shipments, according to an industry official. Steel players have been raising concerns with various ministries including steel and commerce over the surge in steel imports from select countries like China and Vietnam.

The Ministry of Steel on Wednesday held a meeting to review the import situation in the country, an industry executive said. The meeting was chaired by steel secretary Nagendra Nath Sinha and attended by representatives of various steel companies. Several ministry officials also participated in the hour-long meeting, he said.

“Steel makers informed the ministry that there has been a continuous surge in imports from countries like China and Vietnam despite the same type of steel being available in India,” a Steel Ministry official said. When asked about the steps, the official said any action can be initiated only after the study of details submitted by the steel industry to the ministry.

They have also suggested a few measures including elimination of some duty cuts and tariff rate quota where prescribed limits are set for duty free inbound shipments. The matter would also be discussed with the ministries of Commerce and Finance accordingly.

According to SteelMint, steel imports in November were higher at 1.19 million tonnes (MT) against an export of 0.32 MT. In October also, India’s steel imports were higher at 0.46 MT in October 2023, compared to exports of 0.24 MT.

Last month, Tata Steel CEO and MD T V Narendran had described the situation as a matter of concern as India became the net importer of steel in October.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

‘Made in India’ branding on steel products will promote brand India at global level: Scindia

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government on Thursday rolled out an initiative under which steel makers will add ‘Made in India’ labels to their products to promote locally-made goods at the global level. The move is aimed at realising Prime Minister Narendra Modi’s ‘Make in India’ vision, Union Steel Minister Jyotiraditya M Scindia said.

In the first phase, all Integrated Steel Players (ISPs) have been included under the initiative to introduce branding and labelling of ‘Made-in-India’ steel products in the global market, the Ministry of Steel said in a statement. The Secondary Steel Industries (SSIs) will join the initiative in the second phase, it said.

Scindia chaired a consultative committee meeting to discuss the progress on the first-of-its kind initiative by the Ministry of Steel and the Ministry of Commerce and Industry to introduce branding and labelling of ‘Made-in-India’ steel products in the global market. Apart from making Indian steel products more attractive to buyers, this would also ensure standardised quality of goods, it said.

Minister of State for Steel Faggan Singh Kulaste, along with heads of various steel PSUs, attended the meeting here. During the meeting, he highlighted “the significance of branding in promoting the Indian steel industry and realising the PM Narendra Modi’s ‘Make in India’ vision.” He also emphasised on the efforts to build India as a manufacturing centre of the world, which requires a unified and distinctive identity for Indian steel that reflects its quality, innovation, and sustainability practices.

“It is the first ever initiative by any ministry to introduce labelling and branding of the sector’s products. The Ministry of Steel is the first ministry to come up with such a branding exercise, where a single brand identity for Indian-made steel will represent India’s strong manufacturing potential,” Scindia said. ‘Made in India’ branding has been rolled out for select products of all major ISPs.

ISPs-QCI (Quality Council of India) portal Application Programming Interface (API) integration has also been completed for label and QR code authentication, he said. The rollout will be extended to include more products, as well as those by the SSIs in the next phase, the minister said.

“All ISPs, and 65 per cent of India’s steel products have been on-boarded with common labels finalised for all the product categories. Size and space for the Made in India logo has been allocated for each label,” the ministry said. Made in India text will be used till the logo is finalised by DPIIT, it said.

Also Read:Ratnamani Metals and Tubes plans to produce stainless steel long products in-house

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Ratnamani Metals and Tubes plans to produce stainless steel long products in-house

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Ahmedabad-based Ratnamani Metals and Tubes, a manufacturer of seamless stainless steel and welded tubes and pipes is planing to set up an in-house stainless steel long products unit.

In an interaction with CNBC-TV18, the company’s business unit head Manoj Sanghvi said that by backward integration of stainless steel long products, the company aims to strength its position in the industry.

“At the moment, there is no decision yet, but we are working on it.” The proposed project is expected to involve a substantial capital expenditure ranging between ₹500 crore and ₹700 crore.

Until now, the company gets its stainless steel from third-party suppliers.

For the September quarter, Ratnamani Metals reported a revenue growth of 26% and Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) growth of 68% from last year. A key highlight of the quarter was the expansion in margins, which stood at over 21%, compared to the company’s 16% to 18% guiidance.

A key reason behind the margin expansion was due to the higher percentage of stainless steel tube volumes and execution of good margin orders.

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Sanghvi said that the company’s topline for the end of the current financial year is likely to range between ₹4,800 crore – ₹5,000crore. The stainles steel business contributes 30% to the overall topline.

Sanghvi also provided insights into the company’s future margin expectations, projecting a range of 16% to 18%. This guidance, while slightly lower than the margins achieved in the first half of financial year 2024, reflects considerations related to a higher contribution from the water pipe segment, which may impact overall margins.

The company’s current capacity utilization stands close to 60%, showcasing room for further expansion.

Also Read | Ratnamani Metals ends off day’s high despite two-year high EBITDA margin

Ratnamani’s current order book as of November 1 stood at ₹2,950 crore, of which 20% comes from the exports market.

As of now, Ratnamani Metals & Tubes is trading at a fresh lifetime high, having rallied by 30% so far in 2023. The stock is currently trading at a price-to-earnings multiple of 35 times financial year 2025 estimated Earnings per Share (EPS).

With a market cap of Rs 24,375 crore the company appears poised for a dynamic phase of growth and innovation in the stainless steel industry.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

GST Council forms sub-panel to study taxation proposal on steel scrap

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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In what could give some hope to the metal industry that has been seeking a change in the treatment of goods and services tax (GST) on steel scrap, the GST Council is likely to deliberate on the matter in greater detail at the upcoming meet on October 7.

Sources have told CNBC-TV18 that the GST Council is likely to discuss the metal industry’s request to levy GST on steel scrap on a reverse charge mechanism (RCM) basis. Currently, 18% GST is levied on steel scrap.

(Reverse charge means the liability to pay tax is on the recipient of supply of goods or services instead of the supplier of such goods or services in respect of notified categories of supply.)

As the fitment committee nominated by the GST Council has already discussed the proposal in detail, it is likely to seek more time before framing a view on whether to accept or reject the request, sources in the know of the development added.

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According to aforementioned sources, the panel has observed that RCM is not feasible, however, it noted that a solution is needed to address the problems the industry faces.

The fitment committee is of the view that a sub committee is needed to look into the nuances of the industry’s proposal, they added.

The panel, therefore, decided to create a sub-committee of officers to study the issue holistically and come up with a workable solution. The sub-panel has already met on two occasions and is likely to submit its report shortly, sources said.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

US to remove additional duties on Indian exports of Aluminium & Steel

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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With India and the United States (US) resolving all their pending disputes at the World Trade Organization (WTO), the Commerce Ministry has informed that the North American nation has agreed to remove additional duties on Indian exports of Aluminium and Steel products up to a volume of at least 3.3 lakh metric tonnes (LMT) per year.

In reciprocation, India has slashed retaliatory duties imposed on eight items being imported from the US — namely apples, chickpeas, lentils, boric acid, diagnostic reagents, shelled and fresh or dried almonds. Additional duties by India will continue to be levied on 21 imported products from the US, down from 29 products earlier.

India and the US have set up a Joint Monitoring Mechanism (JMM) to reduce retaliatory duties on each other’s products. The JMM will meet twice a year as per its terms of reference and review the implementation of the process.

Opposition leaders Omar Abdullah and Mehbooba Mufti have objected to the government’s decision to remove additional duties, saying that domestic growers will stand to lose due to availability of cheaper American produce in the market.

However, the Commerce Ministry has assured that removal of additional import duties on American products won’t impact domestic producers, adding that apples, almonds and walnuts from the US compete on a level playing field with other countries.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow