MMR - DAILY- 13th Mar 2015.indd

Fr i d ay 1 3 , M a rc h 2 015
News &
Report Analysis
Currency Market
Precious Metal
Base Metal
Energy Market
 Rs 2 lakh cr revenue may accrue from
33 coal mines already auctioned
 Mandatory hallmarking of precious
metals likely next week
 JSW Steel studying option of closing
iron ore mines in Chile
 Bhushan Steel get a new lease of life as
banks lend a further Rs 7,000 cr
 Sesa Sterlite starts mining in Karnataka
2
Friday 13, March 2015
Daily
MMR Landed Prices
London Metal Exchange : Thursday 12, March 2015
Pr. Sell
(1)
Morning Session
Buy
Sell * (2)
Afternoon Session
Buy
Sell
Kerb
Change
(2) - (1)
Value
Stk(tns)
change
$/ton
Rs/ton
Copper Grade A
Spot
5786.00
5865.00
5865.50
5850.00
5850.50
5867.00
79.5
3,30,750 MMR LP
3-mth
5767.00
5850.00
5850.50
5828.00
5829.00
5844.00
83.5
325 14-D MA
3,94,764
PP (HCL)
3,88,044
Average
10-days - 5823.10
20-days - 5778.50
30-days - 5729.90
3,97,636
Tin High Grade
Spot
17725.00
17400.00
17405.00
17349.00
17350.00
17173.00
-320.0
10,615
--
--
3-mth
17725.00
17450.00
17500.00
17399.00
17400.00
17225.00
-225.0
10
--
--
--
--
Average
10-days - 17826
20-days - 17953
30-days - 18181
--
Lead
Spot
1811.50
1812.00
1812.50
1816.00
1816.50
1815.00
1.0
2,12,600 MMR LP
3-mth
1815.00
1814.00
1815.00
1817.00
1818.00
1817.00
0.0
100 14-D MA
1,24,875
PP (HZL)
1,35,700
Average
10-days - 1777
20-days - 1779.70
30-days - 1799.40
1,27,640
Zinc Special High Grade
Spot
2007.50
1999.50
2000.00
1994.00
1994.50
1993.00
-7.5
5,40,200 MMR LP
1,45,286
3-mth
2026.00
2013.00
2014.00
2008.00
2009.00
2008.00
-12.0
-2650 14-D MA
1,45,936
PP (HZL)
1,52,900
Average
10-days - 2017.60
20-days - 2049.90
30-days - 2076.30
Aluminium
Spot
1754.00
1741.50
1742.00
1740.00
1740.50
1738.00
-12.0
39,19,650 MMR LP
1,39,481
3-mth
1770.00
1753.00
1753.50
1750.00
1751.00
1748.00
-16.5
2025 14-D MA
1,41,104
Average
10-days - 1774.10
20-days - 1786.50
30-days - 1806.70
PP (Nalco)
1,50,400
Aluminium Alloy
Spot
1800.00
1785.00
1795.00
NA
NA
NA
-5.0
26,500
3-mth
1815.00
1805.00
1815.00
NA
NA
NA
0.0
0
Average
10-days - 1801.50
20-days - 1795.30
30-days - 1807.50
Nickel
Spot
13975.00
13820.00
13825.00
13844.00
13845.00
13848.00
-150.0
4,30,854
--
--
3-mth
14070.00
13900.00
13925.00
13900.00
13900.00
13905.00
-145.0
-1626
--
--
--
-01-Mar
25-Feb
Average
10-days - 13979
20-days - 14102.80
30-days - 14374
Note: 1. MMR LP = MMR Landed Prices, excluding excise duty. 2. PP = Producer Prices ex-smelter, excl. excise
Copper
Aluminium
Minor Metals ($/LB)
Antimony
99.65%
9,100
Cadmium
99.80%
90.00
Cobalt HG Moly.oxide
99.80%
14.00
9.00
Tantalite
30% Ta2O5
81.00
Titanium Ferro-vana
Con. Ti02
550.00
24.90
Silicon Zinc
Lead
2,050
09-Mar
09-Mar
Week ended Avg of Steel Prices: 06/03/2015 (Incl. Excise duty)
Sponge Iron
Pig Iron
Ferro Alloys :
Mandi
26,500 HMS
31,600 CRP(LSLP)
Mumbai Mkt rates in kgs :
Mumbai
Kolkata
28,600
29,100
30,300
Ferro Moly 990
Delhi
Chennai
Bhiwandi
29,200
27,100
MS Ingots
39,100
28,900
Ferro Silicon 83
Titanium
172
Indicative Domestic Market Rates (Rs./kg)
Mumbai
12-Mar
Prev
Virgin Metals
Copper Pat
Copper W/Bar
Delhi
12-Mar
Comex Copper (cents/lb)
Chennai
Prev
12-Mar
Prev
Mar'15
- Apr'15
420.0
- May'15
-
-460.0
-460.0
416.0
-
Alum Ingot
Zinc Slab
Lead Ingot
Tin Slab
Nickel (4x4)
Scrap
Copper Heavy
Copper Uten.
159.0
170.0
134.0
1,375.0
1,025.0
159.0
170.0
133.0
1,380.0
1,030.0
159.0
180.0
129.0
1,362.0
1,028.0
163.0
181.0
130.0
1,370.0
1,040.0
435.0
410.0
435.0
412.0
---
---
156.0
-
Copper Mixed
Brass Utensil
Brass Huny
Brass Sheet
Alum Utensil
-316.0
315.0
325.0
130.0
-318.0
314.0
325.0
130.0
401.0
--139.0
405.0
--139.0
-
156.0
-
Metal
Gold Std
Silver
Gold
Silver
Gold
Silver
Rate
267.45
266.50
265.85
Change
2.0
2.0
2.0
Kanpur
38,700
Durgapur
35,100
Comex Al (cents/lb)
Rate
-
Change
-
Precious Metals : Indicative Rates
Market
Mumbai
Mumbai
London
London
Comex
Comex
Unit
Rs./10g
Rs./kg
$/tr.oz.
$/tr.oz.
$/tr.oz.
$/tr.oz.
12-Mar
26,200
36,000
1,152.0
15.68
1,152.1
15.49
Prev
26,300
36,300
1,150.0
15.64
1,150.7
15.34
Forex: Mar 12, 2015 (Rs/Unit Currency)
- Buy
- Sell
- Buy
USD
62.56
62.47
EURO
66.48
GBP
93.78
93.67
SGD
45.39
----AUD
48.06
YEN
0.5168
0.5161
SFR
62.41
Sell
66.40
45.32
48.01
62.31
Customs Notified Rates: Feb 06, 2015 [Rs.(Imp/Exp)]: US$ 62.45/61.45;Pound Sterling 95.20/93.05;Euro 71.15/69.40
Daily
3
Friday 13, March 2015
The Asian markets are trading higher as
Against that backdrop, investors attributed
dollar steadied after its recent rally due to
Thursday’s rally in part to a weaker-than-forecast
disappointing data which was released on
retail sales report. Retail sales fell 0.6% in February,
Thursday. The US stocks inched up Thursday,
marking the third month in a row of declining
rebounding after the biggest two-day decline
sales, the Commerce Department said Thursday.
since late January. The Dow Jones Industrial
“Retail sales numbers were much weaker
Average advanced 259.83 points, or 1.5%, to
than anyone expected, so that gives the Fed
17895.22. The S&P 500 index rose 25.71 points,
more leeway to hold off before raising rates,
or 1.3%, to 2065.95, and the Nasdaq Composite
and that’s why the market is rallying,” said Larry
gained 43.35 points, or 0.9%, to 4893.29. For
Swedroe, director of research for BAM Alliance,
the Dow and S&P 500, Thursday’s rally was the
a network of wealth managers that oversees
largest since Feb. 3.
about $25 billion. Still, Mr. Swedroe said he’s
Thursday marked the latest in a string of
skeptical of giving the numbers too much
back-and-forth sessions since the Dow and S&P
weight, and isn’t recommending any allocation
500 both hit their latest record highs on March
shifts because of the data.
2. On Tuesday the index fell more than 300
“Focusing on news like this is like going
points, but with Thursday’s increase the Dow is
uphill with a yo-yo and focusing on the yo-yo
up slightly for the week.
going up and down instead of where you’re
The Stocks have been treading water as
going,” he said. “It’s a good way to get injured.”
investors again question the impact that a
In European stock markets, Germany’s DAX
Federal Reserve rate increase would have on the
slipped 0.1% after hitting its 24th all-time high for
market. In the wake of a stronger-than-expected
the year Wednesday. France’s CAC-40 fell 0.2%.
employment report for February, traders said the
Currency Market
stock market has lapsed back into a “good news is
bad news” mode when it comes to the economy.
The U.S. dollar nursed modest losses on
US unemployment claims declined to 289K
Friday after investors booked profits in an
for the month of February as compared to 325K
extended rally that has driven the greenback to
for the month of January thereby improving the
successive multi-year peaks this week.
labor market. Retail Sales data for the month of
February declined by 0.6 percent at -0.1 percent
USD/INR - 12/03/15
62.50
followed by 0.8 percent decrease in January at
62.56
-1.1 percent.
62.62
In that light, positive economic reports are
62.68
62.74
rates as soon as June, removing an important
support for market. Weak economic news, by
USD/INR Overnight VAR
Data releases today
17:00
16:00
15:00
14:00
13:00
12:00
11:00
62.80
10:00
because they could prompt the Fed to raise
9:00
seen by some investors as a negative for stocks
0.3519
Forecast
Previous
contrast, is seen as giving the Fed room to hold
USD PPI m/m
0.2%
-0.8%
off longer on a rate rise.
USD Core PPI m/m
0.1%
-0.1%
Source : Mecklai Financial
4
Friday 13, March 2015
Daily
An unexpected fall in U.S. retail sales gave
It also lost ground against the euro EUR=,
the market an excuse to sell the dollar, which
which popped up to $1.0613, from a 12-year
promptly retreated from a 12-year high against
trough of $1.0494. The common currency was still
a basket of major currencies.
poised to drop more than 2 percent this week.
The dollar index last stood at 99.332, having
The common currency was also given a bit
slid 0.4 percent on Thursday - its biggest one-
of a reprieve by a bounce in some euro zone
day fall in a month. The index earlier rose as far
government bond yields, which hit record lows
as 100.060, a high not seen since mid-April 2003.
this week as the European Central Bank kicked
off its 1 trillion euro bond buying program.
"The overnight session witnessed the long
The German 10-year bond yield, for example,
overdue consolidation in USD," analysts at CitiFX
rebounded to 0.249 percent after sliding to an
wrote in a research note to clients.
all-time low of 0.187 percent overnight.
"Our trading desk thinks it represents a
generally healthy corrective move. Indeed, we
"Euro zone debt may look a little over-valued.
have seen good USD demand on dips. Turnover
They will of course remain well bid under ECB's
is very high across the G10 space."
bond buying scheme, but their gains have been
Meanwhile the Indian Rupee rebounded
too rapid. The euro may thus hold in range in the
and appreciated by 0.4 percent yesterday on
short term, especially with dollar demand ebbing
sustained dollar selling by banks and exporters
a little ahead of next week's Federal Reserve
and on the back of firm domestic equity market.
meeting," said Masashi Murata, senior currency
strategist at Brown Brothers Harriman in Tokyo.
The dollar index, however, is still on track to
The Fed convenes on March 17-18 for a
end the week up more than 2 percent, extending
policy meeting and the market is keen to
last week's 2.5 percent rally.
With no major market-moving economic
interpret the central bank's monetary policy
data due on Friday, the dollar could continue to
stance after expectations for a mid-year interest
consolidate a little further, traders said.
rate hike increased in light of last week's robust
employment data.
Against the yen, the dollar slipped to 121.34
In the meantime, concerns about Greece
yen JPY=, pulling away from a near eight-year
continued to bubble in the background. The
high of 122.04.
6 mth
LIBOR
Major
Currencies
Today’s
Crosses
Spot
Cash
v/s INR
0.40
USD / INR
-
ATM Options (put/call)
0.15
Forward Rates v/s INR (Export/ Import)
March
April
May
August
November
February
62.44/ 45
62.38/ 40
62.67/ 68
63.12/ 14
63.49/ 51
64.68/ 72
65.80/ 86
66.80/ 89
-
-
-
0.65/0.65
0.81/0.82
0.94/0.96
1.30/1.36
1.59/1.70
1.84/2.01
EUR / USD
1.0616
66.29/ 30
66.23/ 25
66.53/ 54
67.04/ 06
67.46/ 48
68.83/ 86
70.17/ 22
71.41/ 48
0.14
USD / JPY(100)
121.46
51.41/ 42
51.36/ 37
51.60/ 61
52.00/ 01
52.32/ 34
53.38/ 42
54.41/ 47
55.37/ 45
0.68
GBP / USD
1.4870
92.85/ 87
92.76/ 80
93.19/ 74
93.85/ 26
94.37/ 71
96.09/ 95
97.75/ 01
99.25/ 92
-0.70
USD / CHF
1.0040
62.18/ 20
62.12/ 15
62.41/ 43
62.93/ 94
63.43/ 43
64.89/ 89
66.34/ 32
67.63/ 62
3.06
AUD / USD
0.7686
47.97/ 99
47.92/ 97
48.16/ 17
48.51/ 52
48.80/ 80
49.71/ 73
50.57/ 60
51.35/ 39
Source : Mecklai Financial
Friday 13, March 2015
Daily
cash-strapped country has embarked on
2006, boosting the dollar and eroding gold’s
technical talks with its international creditors to
investment appeal. The greenback fell from an
agree reforms and unlock further funding, but
11-year high on Thursday against a basket of six
there is growing frustration with Athens.
currencies. Bullion has declined 2.6 percent in
The greenback also eased against commodity
2015, while the dollar advanced 9.9 percent.
currencies such as the Australian dollar, which
“There’s just no fear in the markets, so why
climbed to around 77 U.S. cents from a six-year
would I want to have my money in gold when
low of $0.7561 set on Wednesday.
stocks are going up and gold has been stuck
Precious Metals
in this downward trend?” Lance Roberts, the
chief strategist for STA Wealth Management
Spot gold prices traded steady on Thursday
in Houston said. “This little correction in the
with a marginal loss of 0.06 percent to close at
dollar could last for days, but until there is a shift
$1153.3/oz. Retreat in the dollar from 12-year
where people see opportunity to put capital
highs arrested its eight-session slide, though
into another currency, I don’t know how far the
speculation that U.S. interest rates could rise
dollar can go.”
sooner rather than later kept prices under
The gold for immediate delivery fell 0.1
pressure. The dollar fell from a fresh high in early
percent to settle at $1,153.73 an ounce. On
U.S. trading on Thursday after a surprise drop in
Wednesday, price touched $1,147.72, the
U.S. retail sales in February.
lowest since Dec. 1. Adding to the concerns
On the MCX, gold prices declined by 0.12
percent and closed at Rs.25655/10 gms.
was the strength in the dollar, which climbed to
its highest in nearly 12 years this week before
The spot silver prices rose by 0.7 percent on
profit-taking prompted some losses. The dollar
Thursday to close at $15.6/oz. Silver prices rose
index, however, is still on track to end the week
in contrary to the marginal fall in gold prices.
up more than 1 percent, extending last week's
Weakening dollar and strength in copper prices
2.5 percent rally.
lifted the prices. On the MCX, silver prices rose
by 0.79 percent and closed at Rs.35325/kg.
A stronger greenback dents bullion's safehaven appeal, and makes it more expensive for
The metal fell for the ninth straight session,
holders of other currencies. In a reflection of
the longest slump since January 1998, as
investor sentiment, holdings in SPDR Gold Trust,
speculation mounted that the Federal Reserve
the world's largest gold-backed exchange-
will increase interest rates for the first time since
traded fund, fell 0.28 percent to 750.95 tonnes
on Thursday – the lowest since late January.
Market Highlights - Gold (% change)
Gold
Gold (Spot)
Gold
(Spot -Mumbai)
Comex Gold
MCX Gold
(Apr’15)
Unit
Last
Prev.
day
as on March 12, 2015
WoW MoM
YoY
Other precious metals have also taken a hit
along with gold. Silver is on track for a second
straight weekly fall, while palladium is on
$/oz
1153.3
-0.06
-3.8
-5.4 -14.5
Rs/10
gms
25750.0
-0.48
-3.0
-5.5 -13.6
$/oz
1152.1
0.12
-3.7
-5.6 -14.4
Rs /10
gms
25655.0
-0.12
-3.4
-3.8 -15.2
course for its worst week since mid-January.
Platinum prices, which fell to their lowest since
Source: Angel Broking
2009 this week, were poised for a seventh
weekly fall in eight.
5
Daily
6
Friday 13, March 2015
In its outlook Angel Broking said, “On an
trade sideways taking cues from international
intraday basis, we expect gold and silver prices
markets. The most-traded May copper contract
to trade lower as optimism in the US economy
on the Shanghai Futures Exchange rallied
has boosted market sentiments in turn hopes of
2 percent to 42,960 yuan ($6,865) a tonne,
rise in the interest rates in the US. Besides, weak
soothed by brighter lending figures out of China
investment demand as reported in decline in
that pushed shorts to cover.
SPDR gold holdings will also exert downside
LME lead is so far the top performer for the
pressure on the yellow metal. On the MCX, gold
month, up 5.2 percent amid signs of improving
prices are expected to trade lower taking cues
demand, while LME tin has suffered the biggest
from weak international markets.”
losses due to limp demand. Tin is down 4
Base Metals
percent so far.
U.S. retail sales unexpectedly fell in February
London copper struck its highest in 10 days
as harsh weather kept consumers from auto
on Friday and was poised for a weekly rise, as
showrooms and shopping malls, tempering
traders bet on improving demand from China
the outlook for first-quarter growth and a June
and a potential fall in mine supply later in the
interest rate increase by the Federal Reserve.
year. The base metals on the LME traded mostly
Also China's central bank governor on Thursday
higher on Thursday as dollar index weakened by
signalled that Beijing is comfortable with the
0.4 providing respite to the falling prices.
current macroeconomic environment and plans
LME copper, Nickel, rose the most in the
base metals pack gaining 2.1 and 1.4 percent
respectively while Lead, Zinc gained by 0.7 and
0.3 percent respectively
to stick with its "prudent" monetary policy.
Energy Market
On Thursday, crude oil prices declined on
In the Indian markets, base metals traded
both sides of the Atlantic with WTI and Brent
mostly positive in line with international trends.
losing its value by 2.3 and 0.8 percent to close at
LME copper prices jumped by 2.1 percent
$47.1 and 57.1/bbl respectively.
as credit growth expanded more than forecast
The reopening of the Houston Shipping
in China, the world’s largest user of industrial
Channel for oil imports and the possibility
metal. Also, triggered short-covering coupled
of higher total U.S. oil inventories stemming
with a dip in the US dollar offered support.
from a tentative deal to end a U.S. refinery
MCX copper prices surged by 1.7 percent
and closed at Rs.371.2/kg on Thursday.
In its outlook Angel Broking expects LME
copper prices to trade sideways as pressure on
policymakers to introduce broad-based stimulus
measures will be supportive. Also, estimates of
favorable inflation and consumer sentiments
data from the US will act as a positive factor.
On the MCX, copper prices are expected to
Market Highlights - Crude Oil (% change)
as on March 12, 2015
Crude Oil
Unit
Last Prev.
day
WoW
MoM
YoY
Brent (Spot)
$/bbl
57.3
0.4
-4.2
8.3 -47.5
Nymex Crude
(Mar ’ 15)
$/bbl
47.1
-2.3
-7.3
-8.1 -52.0
ICE Brent Crude
(Mar’15)
$/bbl
57.1
-0.8
-5.7
4.4 -47.4
MCX Crude
(Mar ’15)
Rs/bbl
3126.0
-0.6
-5.2
-1.0 -49.2
Source: Angel Broking
Daily
Friday 13, March 2015
strike added to the bearishness across the oil
short-lived as oil stocks are forecast to rise
futures complex. Brent's premium to U.S. crude,
further due to refinery maintenance, and the
a favorite play in oil, widened by more than $1
dollar could continue its recent strengthening
to above $10 a barrel on Thursday, hitting a near
against the euro, analysts said.
one-week high.
On the MCX, oil prices declined by 0.6
percent to close at Rs.3126/bbl.
U.S. natural gas futures fell by 2.66 percent
on Thursday on forecasts for continued abovenormal temperatures over the next two weeks
"A slightly weaker dollar is helping crude
despite a slightly bigger-than-expected storage
prices today," said Michael Hewson, chief
draw. Traders noted that the draw was likely the
markets analyst at CMC Markets.
last big one of the winter.
"We've still got a significant supply glut.
The U.S. Energy Information Administration
Overall I think the buyers are starting to shift a
said U.S. utilities pulled 198 billion cubic feet (bcf)
little bit lower." Brent for April delivery was up
of gas from storage last week, more than the 191-
63 cents at $58.17 at 0910 GMT, after gaining
bcf draw analysts forecast in a Reuters poll.
$1.15 during the previous session in a rebound
Outlook
from a one-month low. West Texas Intermediate
climbed 33 cents to $48.50 a barrel, after closing
On an intraday basis, Angel Broking expects
the previous session down 12 cents. The April
oil complex to continue its weakness as rising
contracts for Brent and WTI expire next week.
crude inventories in the US and re-opening of
"When contracts expire there is more
Houston Shipping channel for oil imports will
uncertainty and volatility associated with oil. For
add to the bearish factor. Besides, strengthening
investors speculating, directionally WTI seems
dollar will also exert downside pressure on
to be facing more pressure heading down.
prices. On the MCX, oil prices will trade lower
Brent will move upwards," said Victor Shum, vice
taking cues from weak international markets.
president of IHS Energy in Singapore.
News & Report
Analysis
Brent's premium to US crude widened to
almost $10 a barrel, after dropping below $8
on Tuesday, its narrowest in a month. Bearish
sentiment towards WTI caused by the build in
US crude stocks helped to widen the spread,
limiting the gains in WTI, said Yusuke Seta, a
commodity sales manager at Tokyo's Newedge
Japan. US crude inventories rose for the ninth
straight week, gaining 4.5 million barrels last
week to 448.9 million, US Department of Energy
data showed. That was the highest level at this
time of year in more than 80 years.
"Oil inventories are expected to increase
further," Seta said. Any price gains could be
Rs 2 lakh cr revenue may
accrue from 33 coal mines
already auctioned
The government on Thursday said around Rs
2.09 lakh crore revenue is likely to be generated
from 33 coal mines already auctioned.
"The total estimated amount of revenue
likely to be generated from 33 coal mines
already auctioned is Rs 2,09,740 crore," Minister
of State for Power and Coal Piyush Goyal said in
a written answer to Lok Sabha.
7
Friday 13, March 2015
Daily
The Minister said six major coal producing
official source said that the Bureau of Indian
and
Standards (BIS) Act is being amended to enable
Chhattisgarh are likely to get Rs 1.83 lakh crore
“recall of products” which don’t conform to
as e-auction proceeds and Rs 25,029 crore as
standards while at the same time ordering the
royalty. Besides, these states would get Rs 1,100
manufacturers to “compensate the consumers”
crore towards upfront payment. "In addition,
for sub-standard products.
states
such
as
Odisha,
Jharkhand
power fuel cost will reduce by approximately Rs
“The amendments to the Bureau of Indian
96,971 crore resulting in power tariff savings for
Standards (BIS) Act, 1986, will be taken up next
consumers," the Minister added.
week so that the revised Bill can be tabled in
Mandatory hallmarking of
precious metals likely next
week
the Budget session,” the official said. Currently,
The Cabinet is likely to take up the proposal
of
mandatory
hallmarking
of
precious
metals like gold and silver next week. An
hallmarking the jewellery is a voluntary exercise.
However, once the Bill is passed, the BIS will work
on giving a“unique identification number for every
gold and silver jewellery bought and sold and the
IT backbone for this system is being prepared and
should be ready soon”, the official added.
8
Daily
JSW Steel studying option of
closing iron ore mines in Chile
9
Friday 13, March 2015
debt restructuring (CDR) cell.
A joint lenders’ forum (JLF) — a platform
where lenders decide on the course of action
on exposure that is likely to become nonperforming — has decided that it will allow
Bhushan Steel to draw a line of credit of Rs7,000
that it had sanctioned earlier.
The
steelmaker
already
owes
banks
approximately Rs35,000 crore and has reported
JSW Steel is evaluating the option of shutting
its iron ore mines in Chile on the back of falling
iron ore prices in the international market.
"As the international iron ore prices fell
substantially in last 12 months, Santa Fe Mining
(SFM) has been evaluating the option of taking
temporary shutdown in May 2015," the company
said in a communique to the exchanges.
The Sajjan Jindal-led company holds 70 per
cent stake in SFM through its indirect Chilean
subsidiary, Inversions Eurosh Limitada.
"SFM is also working on reducing costs to
make mining operations viable," JSW also said
in the filing.
JSW had entered into a joint venture with
Chile's Minera Santa Fe in 2008 to develop
iron ore mines and other projects in the Latin
America.
Iron ore prices have nosedived to its near
six-year low in recent times mainly because
of subdued demand from China, the world's
largest consumer of the key steel-making input.
Bhushan Steel get a new lease
of life as banks lend a further
Rs 7,000 cr
Bankers to the highly-leveraged and lossmaking Bhushan Steel have opted to lend a little
over Rs 7,000 crore more to the firm rather than
recast the company’s debt via the corporate
losses for the last five quarters. In the three
months to December 2014, it posted a loss of
Rs454 crore on revenues of Rs2,345 crore.
One public sector banker explained sadi
that the move had been prompted by worries
of higher provisioning expenses that banks
would need to make if the exposure is classified
as ‘restructured’. “We estimate that upwards of
10% of the loan value will have to be provided
for if we decide to restructure the loan,” the
banker added.
The bigger worry is that banks would have
had to take an NPV (net present value) hit. When
a loan is restructured,
banks must provide for 100% of the sacrifice
amount — the difference between the NPV of
future interest income based on the current
Daily
Friday 13, March 2015
10
base prime lending rate (BPLR) and the lower
interest charged (as part of the restructuring
scheme) discounted by the current BPLR.
Post April 2015, Reserve Bank of India (RBI)
rules require a restructured asset to be classified
as non-performing. While restructured loans
require to be provisioned for at 5% of the
loan amount, non-performing assets have to
provided for at 15%.
According to a hypothecation deed, Bhushan
Steel had requested for additional working
capital from a 23-bank consortium led by Punjab
National Bank. Of these, nine have approved
a loan amount of Rs7,000 crore while the
remaining have approved the loan but are yet to
sanction it. “We are in discussion with banks for
realignment of the debt profile as per present RBI
guidelines and there has not been any proposal
for restructuring of debt pending with banks,”
Nitin Johari, CFO, Bhushan Steel, said.
The consortium of lenders will soon meet
to consider whether the exposure to Bhushan
Steel can be refinanced under the 5:25 scheme.
Under this term, loans provided to long-term
"The annual production capacity at the
infrastructure projects will be evaluated for
mines has been capped at 2.3 million tonne. We
refinancing every five years, ensuring viability of
would be able to reach the annual target easily,
the projects and with the need for restructuring
if the market conditions are favourable," he said.
minimised.
Sesa Sterlite starts mining in
Karnataka
Sesa Sterlite, part of Vedanta Group, has
resumed iron ore mining in Karnataka and
expects to produce 700,000 tonne this month.
Tom Albanese, CEO, Vedanta Resources, said
that the State Government has renewed the
mining lease, and the company started mining
in Karnataka from last week after receiving
statutory clearances.
The company's iron ore mine is located in
the southern part of Karnataka in Chitradurga
district which used to produce 6 million tonne a
year before the mining ban was imposed.
Mining activities in the country came to a
standstill after the Supreme Court imposed a
ban due to illegal mining on the basis of the
Shah Commission report.
In April 2013, the apex court lifted the ban
on iron ore mines in Bellary, Chitradurga and
Tumkur districts of Karnataka.