Tag: steel

Double whammy for homebuyers in Maharashtra; homes get costlier

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

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Homebuyers may have to shell out more in the near term as input cost and construction cost surge. The rise in steel, cement and other raw materials costs is causing a dent in the pocket of real estate players, which is why they are mulling a price hike.

But in the case of homebuyers in Maharashtra, it will be a double whammy as the government raised the Ready Reckoner (RR) rates for the municipal corporation areas by an average of 8.8 percent (excluding Mumbai- 2.34 percent) for the financial year 2022-23. This revision is effective from April 1.

Samantak Das, Chief Economist and Head Research and REIS, India, JLL, said, “Though the RR rates have been increased after a gap of four years, it is going to impact the homebuyers as it will lead to higher taxes. The increase in RR rates has come at a time when the stamp duty waiver is over and the state has proposed 1 percent Metro cess. The sharp rise in overall taxes is going to impact the homebuyers’ sentiments and residential sales.”

The average RR rates have been increased by 9.48 percent for Thane, Panvel – 9.24 percent, Navi-Mumbai – 8.90 percent, Mira Bhayandar – 8.30 percent, and Kalyan-Dombivali – 7.42 percent.

RR rates have been raised by 12.15 percent for Nashik, Pune – 6.12 percent, and Pimpri-Chinchwad – 12.36 percent. Das added, “Homebuyers in these regions would have to pay higher taxes which is going to impact residential sales.”

Impact of rising input and other costs

According to Colliers Report, over the last year, developers’ average cost of construction has increased by 10-12 percent. This is due to higher input costs due to supply-side constraints. “This surge in cost comes at a time when developers have been under pressure due to higher debt and liquidity concerns over the last few years.”

The average cost of construction in the residential category was Rs 2,300 in March 2022 as against Rs 2,060 per sq ft in March 2021. In the industrial category, it increased to Rs 2,100 sq ft in March 2022, from Rs 1,900 sq ft, the report stated. “With wholesale price inflation (WPI) and material cost, both seeing a double-digit rise, the cost of construction can rise by a further 8-9 percent by December 2022,” said Ramesh Nair, CEO, India & Managing Director, Market Development, Asia, Colliers.

There is an ongoing uncertainty in the market owing to the ongoing conflict between Russia and Ukraine, which has pushed input costs higher. Sandeep Runwal, President, NAREDCO Maharashtra and Managing Director, Runwal Group, said, “The steel prices have increased by more than 60-100 percent in the last year, prices of cement have gone up by 40-70 percent in different regions making the projects unviable.”

Pritam Chivukula, Co-Founder & Director, Tridhaatu Realty, and Treasurer, CREDAI MCHI said, “Going forward, if the prices don’t drop, the developers will have no option but to pass the additional cost to the consumers as it is happening in all other industries.”

Meanwhile, some developers expect around a 20 percent rise in property prices. Kaushal Agarwal, Chairman of The Guardians Real Estate Advisory, said, “If the current trend continues in the steel, cement, and other key allied industries, then there are chances that the property prices are likely to shoot up 15-20 percent in the next six months.”

The COVID impact on the real estate had just started to fade and demand has gained momentum. Thus, developers are cautious about any upward pricing over a fear that it will dampen demand. But with developers increasingly feeling the pinch of rising input costs, they will have to reconsider the present pricing. “Developers are facing high costs but are being cautious to increase the price for end-users as it might impact overall demand,” said Argenio Antao, Chief Operating Officer, Colliers India.

Meanwhile, Agarwal added that real estate prices have not gone up in the last couple of years despite the sector being suppressed due to several disruptions.

Seeking intervention

Antao added some intervention from the government in the form of lower import duty can provide some relief to developers, especially in segments with low margins. Residential projects in the affordable and mid-income segments carry relatively lower margins and are price sensitive.

NAREDCO has even approached the Ministry of Housing & Urban Affairs to look into the rising prices of raw materials. Runwal added, “We are also approaching the RERA authorities to consider this as a Force Majeure and to allow the escalation in the selling prices of the flats. We are requesting the intervention of the Housing Ministry to reduce the prices.”

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

Metal stocks surge in trade today; JPMorgan, Nomura bullish on steel, here’s why

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

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The entire metal index is buzzing and so are steel stocks. One of the key reasons is that both Ukraine and Russia, put together, contribute nearly 15-16 percent of the global steel exports. On back of the Russia-Ukraine conflict, there is going to be a price disruption according to most of the brokerages.

Also Read: Metal prices to jump further if Russia-Ukraine talks make no headway, says Nirmal Bang Commodities

JPMorgan and Nomura are bullish on steel stocks from metal space. With the current disruption and without the ramp up in the Chinese exports, JPMorgan expects the steel prices to go up which will benefit the Indian exports as well. JPMorgan expects the India exports to go up as well as domestic prices to be firm which will lead to margin expansion for Indian steel mills.

Also Read: Will use weakness as an opportunity to invest in market, says Aberdeen’s Hugh Young

Nomura believes that this disruption will mean a potential export benefit or opportunity for the Indian steel companies. Nomura expects the domestic prices and international prices to firm up further. However, Nomura believes that it will be very difficult for the steel companies to maintain the spreads largely because the coking coal prices have gone up.

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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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

Steel PLI to draw Rs 40,000 crore in investments, generate 5.25 lakh jobs: Ministry

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

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The Rs 6,322-crore Production Linked Incentive (PLI) scheme for specialty steel, approved by the government in October, will draw additional investments of about Rs 40,000 crore and generate 5.25 lakh jobs apart from adding a capacity of 25 million tonnes, the steel ministry said on Tuesday.

State-run Mecon will monitor the execution of the PLI scheme. The government expects the production of speciality steel to touch 42 million tonne (MT) by 2026-27.

The Centre has, however, deferred the implementation of the five-year PLI scheme by a year from 2022-23 to 2023-24. The government will release the incentives under the scheme from 2024-25. In October, the government had said it would release the incentives from 2023-24.

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Sources told Financial Express that the government deferred the implementation of the scheme following requests from the industry and potential applicants. The steel industry has sought time to prepare the required infrastructure for the production of speciality steel. The government will start calling for applications to participate in the scheme from today till March 31, 2022.

Meanwhile, cumulative production of crude steel in the first eight months of this fiscal was 76.44 MT, while that of finished steel was 72.07 MT, which is higher than the amount recorded in the same period in the last three years, Mint reported.

The country exported 9.53 MT of steel during April-November 2021 and imported 3.06 MT. In the same period last year, the country had exported 10.78 MT and imported 4.75 MT. “This improved performance was achieved despite the adverse effect of the second wave of COVID-19 and concomitant localised lockdowns,” Mint quoted the ministry as saying.

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Meanwhile, union finance minister Nirmala Sitharaman has said PLI schemes are game-changers that have helped attract huge investment into the country and also build manufacturing capabilities.

In the union budget 2021-22, Sitharaman had announced an outlay of Rs 1.97 lakh crore under PLI schemes across 13 sectors, including textile, automobiles, pharmaceuticals, steel and telecom.

“The PLI scheme I think has been a game-changer in drawing industries coming out of certain geographical territories to countries like India and being a part of the domestic and also the export market,” PTI quoted the minister as saying.

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

Budget 2022: Key recommendations for iron and steel sector

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

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The Steel Ministry has pitched for lower or nil import duties on key raw materials needed for the iron and steel production in India. CNBCTV18 learned that the ministry has recommended for nil duty on anthracite, met coke, cooking coal, limestone, dolomite – all key ingredients for the production of steel.

The revenue impact on account of nil duty will be close to Rs 2,000 crore but the ministry has backed its request by highlighting that the revenue loss will be compensated by an increase in steel production and thereby increasing goods and services tax (GST) and corporate tax collection.

Sources said the ministry has also sought nil duty on import of ferro-nickel from the current 2.5 percent duties and 5 percent reduction in customs duty on granite electrodes from the current 7.5 percent.

The ministry has also pitched for the inclusion of the steel industry under remission of duties and taxes on exported products (RoDTEP) which may bring advantage of 9-10 percent on the cost and help the steel industry become more competitive globally.

The industry has also sought the inclusion of specialty steel products that are imported as part of HS codes to ensure categorisation. Citing that product categorisation will help effective implementation of Production Linked Incentive (PLI) scheme for the specialty steel. The cabinet approved Rs 6,322 crore PLI scheme in July this year. The scheme’s objective is to boost production and attract investment of about Rs 40,000 crore in specialty steel.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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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

All you need to know about the $2.6-bn green hydrogen project planned for Europe

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

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Spain-based global renewable energy company, Iberdrola, and H2 Green Steel, a Swedish start-up aimed at producing fossil-free steel, have come together to build a massive, green hydrogen-based steel production plant on the Iberian Peninsula.

The plant will curb carbon emissions by steel production by a whopping 95 percent. The production is intended to commence by 2025-26. The partnership has emerged in the wake of the European Clean Hydrogen Alliance announcing a pipeline of projects (750+) to boost the European hydrogen industry.

What is the Iberdrola-H2 Green Steel deal? 

The partnership between Iberdrola and H2 Green Steel will foster a project with a budget of $2.6 billion to build a facility with an electrolysis capacity of 1 Gigawatt to produce green hydrogen. The green hydrogen produced will then be channelized to a 2-million-tonne direct reduction tower that will treat iron ore to produce steel. Using green hydrogen for the production of steel will reduce the CO2 emission by 95 percent.

With the signing of the deal, the two companies have agreed to jointly operate the facility, which will incorporate a 1GW capacity electrolyser and a DRI (Direct Reduced Iron) facility capable of producing 2 million tonnes of green steel annually. Iberdrola will provide wind power-produced electricity, and H2 Green Steel will look over the DRI process.

The funds for the project will be sourced from green project financing, equities, and public funding.

Why it’s significant

The 1GW facility to be set up in the Iberian Peninsula is a significant step towards achieving zero emission. According to the International Energy Agency, the current electrolyser capacity stands at 0.3GW. The deal between Iberdrola and H2 Green Steel will help reduce the carbon footprint of the steel industry immensely. According to the official IEA data, the steel industry is responsible for 2.6 gigatonnes of CO2 emission annually and is the largest consumer of coal in the industrial sector. With the Iberdrola-H2 Green Steel Deal, the dependency of the steel industry on coal will reduce.

Green hydrogen and green steel

Hydrogen is slowly gaining traction in the industrial sectors for its usage in various sectors such as mobility, energy, and manufacturing. Three things are crucial for the production of hydrogen – water, electrolyser, and electricity.

If the hydrogen is produced using electricity produced by fossil fuels, it is called grey hydrogen. A better alternative, which halves the carbon emission by fossil fuels, is blue hydrogen, which is produced via steam-methane reforming. High-temperature steam (700°C–1,000°C) is used to produce hydrogen from a methane source, such as natural gas. However, this process isn’t emission-free.

The least CO2 emitting hydrogen is produced if the electricity is produced using renewable resources of energy. When electricity produced from green alternatives is used to power the electrolysis of water, the product of the process is called green hydrogen.

Steel is at the helm of the modern economy. Every manufacturing facility, big or small, uses steel. The production of steel is a significant contributor of CO2 into the atmosphere since, currently, the energy used to treat the iron ore to convert it into steel is derived from fossil fuels that produce carbon in abundance.

Green hydrogen is a capable alternative to fossil fuels, and when mixed with natural gas, it fires up the DRI processes to produce iron pellets that are environmentally efficient.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

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

Domestic steel prices to correct in December; cautious on non-ferrous metals: Phillip Capital

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

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Metal stocks continue to move down with the index slipping over 2 percent on November 30. Vikash Singh, Vice President of Metals & Mining at Phillip Capital, shared his outlook on metals.

According to him, the first half of 2022 still looks good for the steel sector.

“So we are not that negative on steel as of now,” he said.

However, he expects some price correction in the domestic market.

“On steel outlook, we feel December might be a little bit weaker because we are expecting some price correction in the domestic market,” he said.

Also Read: Bullish on metals space; expect higher levels on Tata Steel: Rakesh Arora

He believes, Vedanta got supported by the news of promoters buying.

“In the non-ferrous space, they are more exposed to the global market than the ferrous space because their dependence on exports is much higher than steel. So I would be trading a little bit cautious in the non-ferrous space,” he said.

On the ferrous side, iron ore has fallen roughly about 55 percent from its peak levels.

A string of bad news on the macro front as well as the new variant of the coronavirus- Omicron has also shaken the sentiment of the investors.

On the non-ferrous side, power cost has been playing a vital role in terms of defining the end prices of aluminum as well as zinc.

For the full interview, watch the accompanying video.

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

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

Commodity market in a supercycle; like steel, aluminum: JPMorgan

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

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The commodity market currently is witnessing a supercycle in terms of price performance, said Pinakin Parekh, Metals and Mining and Oil and Gas Analyst at JPMorgan.

“Commodity space right now looks to be in a super cycle,” said Parekh in an interview with CNBC-TV18.

A commodity supercycle is a rare phenomenon that sees an unusually strong demand growth for commodities for a long period — which suppliers struggle to keep the pace with — leading to a sharp rally in prices. A supercycle last for years or even a decade.

“Many of the commodities hit decadal high prices earlier in this year. Some prices have cooled off. On metals and mining sector, our view is that while earnings did peak out seemingly in Q2FY22, it looks like many companies could see a plateau in earnings at very elevated levels compared to what they have seen in the past. We like steel, we like aluminum from a sector perspective,” said Parekh.

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Steel prices in China have fallen very sharply, however, in Asia, Europe and US, prices have not corrected that severely, Parekh noted. “So, it does not look that China is exporting the domestic price weakness out,” he said.

Parekh expects coking coal prices to come off. “We do not see a big decline in domestic steel prices. If you put that in the context of over the next two-three quarters, we should have lower coking coal cost and stable steel prices so that is a good backdrop for earnings,” he explained.

Overall, Parekh remains constructive on the commodity space.

“Our view is that consensus earnings compared to what is happening on the ground remain too low and therefore the risk reward remains attractive broadly for stocks in this space,” he said.

For the full interview, watch the accompanying video.

Catch all market updates here.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

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