Th u r s d ay 1 6 , O c to b e r 2 0 1 4 News & Report Analysis Currency Market Precious Metal Base Metal Energy Market  RINL incurs Rs 40-50 cr loss/day due to Hudhud: Chairman  Tata Steel plans to sell UK division to Klesch Group  IFCI invokes one lakh shares of Bhushan Steel  Essar Gr raises $450 mn to expand Minnesota project  Iron Ore prices to remain at an average of $85 by 2015 - UBS 2 Thursday 16, October 2014 Daily MMR Landed Prices London Metal Exchange : Wednesday 15, October 2014 Pr. Sell (1) Morning Session Buy Sell * (2) Afternoon Session Buy Sell Kerb Change (2) - (1) Value Stk(tns) change $/ton Rs/ton Copper Grade A Spot 6780.50 6780.50 6781.00 6692.00 6692.50 6685.00 0.5 1,54,650 MMR LP 4,50,042 3-mth 6729.00 6745.00 6746.00 6654.00 6655.00 6641.00 17.0 2925 14-D MA 4,47,139 PP (HCL) 4,56,624 Average 10-days - 6736.90 20-days - 6762.50 30-days - 6815.10 Tin High Grade Spot 20155.00 19720.00 19725.00 19664.00 19665.00 19551.00 -430.0 9,155 -- -- 3-mth 20220.00 19700.00 19705.00 19724.00 19725.00 19610.00 -515.0 95 -- -- -- -- Average 10-days -20215.50 20-days - 20521.80 30-days - 20748.30 Lead Spot 2053.50 2042.00 2042.50 2014.00 2015.00 1997.00 -11.0 2,25,525 MMR LP 1,40,355 3-mth 2065.00 2054.00 2055.00 2024.00 2025.00 2008.50 -10.0 -75 14-D MA 1,42,386 PP (HZL) 1,51,200 Average 10-days -2074 20-days - 2071.40 30-days - 2094 Zinc Special High Grade Spot 2323.50 2328.00 2330.00 2273.00 2274.00 2273.00 6.5 7,26,400 MMR LP 1,63,142 3-mth 2328.00 2331.00 2332.00 2279.00 2280.00 2278.50 4.0 -75 14-D MA 1,61,974 PP (HZL) 1,75,000 Average 10-days -2304.80 20-days - 2279.30 30-days - 2289.20 Aluminium Spot 1909.00 1912.00 1912.50 1897.00 1898.00 1892.00 3.5 45,35,475 MMR LP 1,48,133 3-mth 1938.00 1940.00 1941.00 1925.00 1926.00 1919.00 3.0 -4450 14-D MA 1,47,292 PP (Nalco) 1,59,900 Average 10-days -1899.80 20-days - 1914.20 30-days - 1949.60 Aluminium Alloy Spot 2080.00 2075.00 2085.00 2085.00 2086.00 2081.00 5.0 27600 3-mth 2095.00 2090.00 2100.00 2100.00 2100.00 2095.00 5.0 -80 Average 10-days -2085 20-days - 2084.30 30-days - 2096.80 Nickel Spot 16180.00 16130.00 16135.00 15769.00 15770.00 15753.00 -45.0 3,74,934 -- -- 3-mth 16290.00 16210.00 16230.00 15849.00 15850.00 15830.00 -60.0 1824 -- -- -Copper Aluminium -01-Oct 19-Sep Zinc Lead 09-Oct 13-Oct Average 10-days -16390 20-days - 16715.50 30-days - 17382.20 Note: 1. MMR LP = MMR Landed Prices, excluding excise duty. 2. PP = Producer Prices ex-smelter, excl. excise Minor Metals ($/LB) Antimony 99.65% 9,600 Cadmium 99.80% 90.00 Cobalt HG Moly.oxide 99.80% 14.00 14.25 Tantalite 30% Ta2O5 92.00 Titanium Ferro-vana Con. Ti02 650.00 24.90 Silicon 2,050 Week ended Avg of Steel Prices: 11/10/2014 (Incl. Excise duty) Sponge Iron Pig Iron Mandi 29,400 HMS 33,600 CRP(LSLP) Mumbai 29,800 32,900 Kolkata 29,500 - Indicative Domestic Market Rates (Rs./kg) Mumbai 14-Oct Chennai 29,800 32,200 MS Ingots Bhiwandi 38,300 Comex Copper (cents/lb) Prev Delhi 14-Oct Prev -511.0 -511.0 444.0 - 444.0 - Alum Ingot Zinc Slab Lead Ingot Tin Slab Nickel (4x4) Scrap Copper Heavy Copper Uten. 166.0 187.0 137.0 1,510.0 1,150.0 166.0 187.0 137.0 1,510.0 1,150.0 170.0 199.0 133.0 1,496.0 1,145.0 170.0 199.0 133.0 1,496.0 1,145.0 475.0 432.0 475.0 432.0 --- --- Copper Mixed Brass Utensil Brass Huny Brass Sheet Alum Utensil -326.0 -339.0 135.0 -326.0 -339.0 135.0 434.0 -322.0 142.0 434.0 -322.0 142.0 Virgin Metals Copper Pat Copper W/Bar Delhi 29,700 - Jul'14 Aug'14 Sep'14 Rate 300.45 300.75 300.90 Change -2.6 -2.6 -2.6 Kanpur 38,000 Durgapur 34,300 Comex Al (cents/lb) Rate - Change - Precious Metals : Indicative Rates Metal Gold Std Silver Gold Silver Gold Silver Market Mumbai Mumbai London London Comex Comex Unit Rs./10g Rs./kg $/tr.oz. $/tr.oz. $/tr.oz. $/tr.oz. 15-Oct 27,400 39,500 1,237.5 17.01 1,244.1 17.41 Prev 27,400 39,500 1,234.8 17.50 1,233.6 17.35 Forex: Oct 14, 2014 (Rs/Unit Currency) Buy USD 61.47 61.38 EURO 77.78 GBP 97.88 97.75 SGD 48.23 — — AUD 53.71 YEN 0.5754 0.5746 SFR 64.41 Sell 77.67 48.15 53.64 64.30 Buy Sell Customs Notified Rates: Oct 02, 2014 [Rs.(Imp/Exp)]: US$ 62.30/61.30;Pound Sterling 101.25/99.00;Euro 79.00/77.10 Currency Market US dollar currency fell the most in 15 months versus the yen as a bigger-than-forecast drop in retail sales prompted traders to pare wagers the Federal Reserve will increase borrowing costs for much of next year. The dollar currency has USD/INR - 14/10/14 USD/INR Overnight VAR Data releases today 17:00 16:00 15:00 14:00 13:00 12:00 11:00 60.90 60.98 61.06 61.14 61.22 61.30 61.38 61.46 10:00 Asian stocks slid toward a six-month low and average bond yields for the biggest developed economies fell to a record on concern that Europe’s economic woes may scupper the global recovery. Crude oil extended declines as South Korea’s won led emerging-market currencies higher. MSCI's broadest index of AsiaPacific shares outside Japan was down about 0.2 percent. While equity stocks at Shanghai market also bucked the downtrend and added 0.6 percent after Chinese bank lending data provided a regional bright spot. Lending beat expectations last month, a sign that demand for credit may be picking up, though a drop in China's foreign exchange reserves in the third quarter suggested ominous speculative money outflows. S&P 500 e-mini futures edged up 0.3 percent, which might portend a more stable day ahead on Wall Street as investors await more U.S. data. Among the regional economy update, U.S. retail sales and producer prices both dropped last month, a worrisome economic signal that helped fuel a sell-off on Wall Street as it quashed expectations the U.S. Federal Reserve would hike U.S. interest rates sooner rather than later. The New York Fed's Empire State general business conditions index also plunged to 6.17 in October from September's 27.54, marking the weakest pace of manufacturing activity in New York state since April. China’s broadest measure of new credit rose to a three-month high in September as the central bank’s targeted measures to boost liquidity helped spur lending. 9:00 Daily 3 Thursday 16, October 2014 0.3554 Forecast Previous USD Industrial Production m/m 0.4% -0.1% USD Capacity Utilization Rate 79.0% 78.8% Source : Mecklai Financial a high risk of falling versus the yen and adding to its biggest slide in six months, according to JPMorgan Chase & Co., with global markets roiled by concerns that growth and inflation are slowing. The Bloomberg Dollar Spot Index held declines as traders pushed back expectations for a U.S. interest-rate increase to December 2015, after earlier this month seeing a rise as likely to come in July. Australia’s dollar fell on speculation yesterday’s 1.3 percent advance was unwarranted. China has shown “some renewed willingness” to let the yuan strengthen, the U.S. Treasury Department said in a report. South Korea’s won rose. “There’s a general unease across markets,” said Naohiro Nomoto, an associate for foreignexchange trading at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “People seem to be dropping their long dollar-yen positions, and taking a watch-and-wait attitude,” he said referring to wagers on gains in the U.S. currency. The dollar was at 106.16 yen as of 1:26 p.m. in Tokyo after dropping 1.1 percent yesterday, the biggest loss since April 8. The greenback traded at $1.2817 per euro after weakening 1.4 percent yesterday to $1.2838. Japan’s currency was at 136.06 per euro from 135.99. Hedge funds and other large speculators raised their net bullish dollar bets versus eight 4 Thursday 16, October 2014 Daily 6 mth LIBOR Major Currencies Today’s Crosses Spot Cash v/s INR 0.32 USD / INR - ATM Options (put/call) 0.15 Forward Rates v/s INR (Export/ Import) October November December March June September 61.56/ 57 61.50/ 51 61.74/ 76 62.11/ 14 62.54/ 58 63.71/ 75 64.88/ 92 65.98/ 02 - - - 0.00/0.56 0.00/0.76 0.00/0.94 0.00/1.42 0.00/1.80 0.00/2.15 EUR / USD 1.2822 78.93/ 94 78.85/ 86 79.16/ 18 79.66/ 69 80.23/ 27 81.78/ 82 83.36/ 39 84.84/ 87 0.16 USD / JPY(100) 106.07 58.04/ 04 57.98/ 98 58.21/ 23 58.57/ 60 59.00/ 03 60.16/ 20 61.33/ 37 62.43/ 48 0.69 GBP / USD 1.5986 98.41/ 43 98.31/ 33 98.69/ 74 99.28/ 26 99.92/ 71 101.70/ 95 103.47/ 01 105.15/ 92 0.06 USD / CHF 0.9415 65.38/ 40 65.32/ 34 65.57/ 59 65.98/ 00 66.47/ 51 67.80/ 83 69.15/ 14 70.40/ 41 3.06 AUD / USD 0.8786 54.11/ 12 54.06/ 07 54.24/ 28 54.57/ 62 54.95/ 01 55.98/ 04 57.01/ 07 57.98/ 03 Source : Mecklai Financial of its major peers to a record 313,878 contracts as of Oct. 7, compared with 281,204 a week earlier, according to data from the Washingtonbased Commodity Futures Trading Commission. Precious Metal Gold traded near a five-week high as U.S. economic data that missed estimates added to signs a global slowdown may hurt the U.S. recovery, boosting demand for a haven as the dollar and equities dropped. Gold for immediate delivery traded at $1,240.37 an ounce at 12:23 p.m. in Singapore from $1,242.02 yesterday, when prices climbed to $1,249.75, the highest since Sept. 11, according to Bloomberg generic pricing. The metal advanced with Treasuries as U.S. retail sales dropped more than forecast in September. Bullion rebounded from this year’s low on Oct. 6 and is headed for the first back-to-back as on October 15, 2014 Market Highlights - Gold (% change) Gold Gold (Spot) Unit Last Prev. day WoW MoM YoY $/oz 1240.6 0.67 1.6 0.0 -3.1 Gold (Spot -Mumbai) Rs/10 gms 27100.0 0.74 0.9 0.4 -9.1 Gold (LBMA-PM Fix) $/oz - - - - - Comex Gold (Apr’14) $/oz 1240.8 -0.27 1.3 2.1 -2.5 Rs /10 gms 27252.0 1.07 1.9 1.0 -5.7 MCX Gold (June’14) Source: Angel Broking weekly rise since July on speculation that the Federal Reserve may delay interest-rate increases. The MSCI All-Country World Index of equities slumped to an eight-month low and the Bloomberg Commodity Index of 22 raw materials retreated to the lowest level since July 2009. “Gold’s rally has been a combination of a flight to safety and shorts being squeezed,” said Sun Yonggang, a macroeconomic strategist at Everbright Futures Co. in Shanghai, referring to the unwinding of bets on lower prices. “The dollar continues to be the main driver of gold. The big selloff in other markets may cause some people to take profit on their gold positions to meet margin calls elsewhere.” Gold for December delivery decreased 0.3 percent to $1,240.90 an ounce on the Comex in New York, after climbing yesterday to $1,250.30, the highest price since Sept. 11. Holdings in the SPDR Gold Trust, the biggest exchange-traded product backed by bullion, fell yesterday to 759.14 metric tons, the least since December 2008. More importantly, Gold imports by India, the largest user after China, probably surged more than fourfold last month on expectations declining prices would boost festival demand. Purchases are estimated at about 95 metric tons compared with 15 tons to 20 tons in September Daily 5 Thursday 16, October 2014 last year, said Bachhraj Bamalwa, a director at the All India Gems & Jewellery Trade Federation. The government raised import taxes for a third time in August last year after a month earlier obliging importers to set aside 20 percent of purchases for re-export as jewelry. Base Metal Global base metal commodities market sank to a five-year low as energy prices extended losses on rising supplies and U.S. economic data that missed estimates added to concern that global growth may be faltering, hurting the outlook for raw materials. Copper futures tumbled the most in seven months as signs of muted inflation signaled lower metal demand in China, the world’s top user, and the U.S., the second-biggest. In September, Chinese consumer costs rose at the slowest pace since January 2010, and U.S. wholesale prices unexpectedly fell for the first time in a year, separate reports showed today. Copper fell 6.1 percent in the third quarter amid concern that supplies will top demand. As per the recent study from the International Copper Study Group estimated that the global market will swing to a surplus next year. Even with signs of slowing demand, mining companies are spending more to increase production. Inventories monitored by exchanges in London, New York and Shanghai increased in five of the past six weeks. “Another round of concerning data on the economic front is weighing on copper,” David Meger, the director of metal trading at Vision Financial Markets in Chicago, said in a telephone interview. “Slower growth means a deflationary environment, which by definition is lower pricing, and lower prices puts pressure across the whole commodity market.” Copper futures for December delivery tumbled 2.6 percent to settle at $3.009 a pound at 1:15 p.m. on the Comex in New York, the biggest decline for a most-active contract since March 11. Copper demand will top refined production by 307,000 metric tons in 2014, the International Copper Study Group said yesterday. The shortfall will end next year, with output exceeding usage by 393,000 tons, the group estimates. LME monitored inventory stocks climbed for the third straight day, the longest string of gains in a month. Retail sales in the U.S. dropped more than forecast in September, a government report showed today, adding to demand concerns. Copper for delivery in three months fell 2.3 percent to $6,641 a ton ($3.01 a pound) on the LME. Among the other base metal Tin declined 0.2 percent to $19,610 a ton. The metal will trade from $20,000 to $21,500 this quarter, according to Sucden Financial Ltd. Prices will be supported as Indonesia’s ore-export ban stays in place and spurs supply deficits, Steve Hardcastle, head of client liaison, said yesterday. Aluminum, nickel, lead and zinc also dropped. Energy Market West Texas Intermediate oil declined after ending last session down 0.1 percent at $81.78, its lowest settlement since June 2012. Brent for November settlement, which expires today, declined as much as 71 cents, or 0.9 percent, to $83.07 a barrel on the London-based ICE Futures Europe exchange. The more-active December contract was down 70 cents at $83.42. Bank of Market Highlights - Crude Oil (% change) as on October 15, 2014 Crude Oil Unit Last Prev. day WoW MoM YoY Brent (Spot) $/bbl 84.1 -2.7 -6.8 -12.8 -24.3 Nymex $/bbl Crude (June ’14) 81.8 -0.1 -6.3 -12.1 -19.2 ICE Brent Crude (May’14) $/bbl 83.8 -1.5 -8.3 -14.6 -23.8 MCX Crude (May ’14) Rs/bbl 84.1 -2.7 -6.8 -12.8 -24.3 Source: Angel Broking Daily Thursday 16, October 2014 America Corp. and BNP Paribas SA predict prices will hold above $80 a barrel. Commerzbank AG also sees that level as a possible low for Brent crude. They’re in part counting on OPEC cutting output -- some say as soon as next month -- to compensate for recent declines in demand. The lowest oil price in four years will provide stimulus of as much as $1.1 trillion to global economies by lowering the cost of fuels and other commodities, according to Citigroup Inc. Brent, the world’s most active crude contract, closed at $83.78 a barrel in London yesterday. That’s more than 20 percent below its average for the past three years, amounting to savings of about $1.8 billion a day based on current output, Citigroup estimates. Savings will climb to $1.1 trillion annually as the slide cuts costs of other commodities, leaving consumers and companies with extra cash to spend and bolstering growth, according to Ed Morse, the bank’s head of global commodities research in New York. News & Report Analysis RINL incurs Rs 40-50 cr loss/ day due to Hudhud: Chairman Rashtriya Ispat Nigam Limited (RINL), the corporate entity of Vizag Steel Ltd, said that it is incurring losses of Rs 40-50 crore per day following shutting down of its operations due to devastation caused by cyclone Hudhud in the last three days. The plant is expected to return to production level in next 10-15 days. "We are impacted by the cyclone both in terms of operations and environment (damage caused to plant's green belt). Both power sources, internal and external, have been affected. Entire plant was shut on October 11 (a day before cyclone struck the Andhra coast)," RINL Chairman and Managing Director P Madhusudan stated. He said the production loss following the shut-down could be up to one lakh tonne. RINL has a capacity to produce nearly four million tonne per annum, which was upgraded to six million tonne recently. Madhusudan said the ongoing loss would impact the overall annual production target. Tata Steel plans to sell UK division to Klesch Group Tata Steel said it is in talks with Swiss investment firm Klesch Group to sell a part of its European assets, including mills in northern England and Scotland as part of exercise to streamline its overseas businesses. Europe's second-largest steel producer said an initial agreement for sale of its long-products manufacturing and distribution sites in UK, France and Germany. Long steel products, such as rebars and rails are mostly used in construction. The division employees about 6,500 people in Britain and Europe. 6 Daily Thursday 16, October 2014 Overall, Tata employs 30,500 people in Europe, including 17,500 in Britain. Tata Steel had in August stated that it is taking steps to restructure operations and cut costs by producing more high- value products and cutting jobs. It said on Wednesday it has decided to focus on strip products. According to the memorandum of understanding signed with Genevaheadquartered Klesch, Tata will sell UK-based assets including Scunthorpe Steelworks, mills in Teesside, Dalzell and Clydenbridge in Scotland, as well as operations in France and Germany, if a final deal is struck. "We have decided to concentrate our resources mainly on our strip products activities, where we have greater cross-European production and technological synergies," said Karl Koehler, chief executive of Tata Steel's European operations. The two sides will "now move into detailed due diligence and negotiations, though no assurance can be given about the outcome," he said. The Klesch Group, headquartered in Geneva is a global industrial commodities business, with three divisions specialising in the production and trading of chemicals, metals and oil. Unions oppose sale Unions have reacted with anger to the news that Tata Steel is in discussions to sell its European long product division centred in Scunthorpe, UK. In a joint statement the Community, Unite and GMB union said they were opposing the sale at this stage and would call on the government to intervene to ensure a future for the assets. They expressed disappointment over the fact that they had only been made aware of the plan two days before. 7 Daily Thursday 16, October 2014 “The unions have been treated with contempt in this process as the level of consultation we would expect ahead of such a major strategic announcement has not taken place.” Unions are set to meet next week to decide their next potential steps. “The fact that Tata Steel wants to abandon half of its European operations and pull out of an entire strategic market does not bode well for the future and ends Tata Steel’s vision to be a global steel player,” they added. CEO of Tata Steel’s European operations Karl Kohler said the long process of consulting with stakeholders including employees and unions was only just beginning. “Before that point I wouldn’t see what there would be to consult about.” IFCI invokes one lakh shares of Bhushan Steel Financial institution IFCI has invoked one lakh shares of Bhushan Steelthat were pledged by the debt-ridden company's promoter Neeraj Singal. Singal is also Vice Chairman & Managing Director. In a filing to the BSE, Bhushan Steel said that company's one lakh shares, that were pledged by Singal, have been invoked by IFCI Ltd. As per the filing, 36,732 shares were pledged on October 7 and 27,330 on October 9. Again 5,059 shares were pledged on October 10, followed by 30,879 on October 13. The CBI in August had arrested Singal in connection with alleged Rs 50 lakh bribery scandal involving CMD of Syndicate Bank S K Jain. Meanwhile, the company has denied that lenders are looking at selling it. "Bhushan Steel is a standard account. Hence, the question of lenders looking at selling it does not arise in this situation," a company spokesperson said reacting to media reports. Essar Gr raises $450 mn to expand Minnesota project The Essar Group owned by the billionaire Ruia brothers have achieved financial closure for the $1.8 billion Minnesota Mining project making some headway six years after the asset was acquired. The group has raised $450 million from a clutch of New York based funds to fund the expansion of the mine. Essar Steel Minnesota had raised $450 million from banks, but returned the funds after securing what it called was a better deal from funds based in New York, Madhu Vuppuluri, president and CEO of Essar Minnesota said. The Essar Group, the promoters of the $1.8 billion project have committed $750 million as equity. About $700 million debt has been raised from Indian banks. The American hedge funds are investing $450 million in high yield bonds for six years which can be repaid before maturity. Iron Ore prices to remain at an average of $85 by 2015 UBS Global iron ore suppliers are locked in a battle for market share as a surplus expands, according to UBS AG, which cut price forecasts for 2015 and 2016 while sticking with a call for an end-of-year rally this quarter. The steelmaking raw material will average $85 a metric ton in 2015 and $82 in 2016, analysts including Daniel Morgan said in a report received today. Previously, the outlook for both years was an 8 Daily Thursday 16, October 2014 average of about $103 a ton. Iron ore will rally toward $100 this quarter as mills restock, the bank said. Iron ore tumbled 39 percent this year after companies including Rio Tinto Group (RIO), BHP Billiton (BHP) Ltd. and Vale SA raised low-cost output in Australia and Brazil, spurring a glut. The global market is in the midst of a transition without precedent in recent commodity history as supply surges and some higher-cost mines are displaced, according to Macquarie Group Ltd. “The iron ore game has changed from a growth opportunity into a battle for market share,” the UBS analysts wrote. “Seaborne producers will try to displace high-cost domestic supply in China, but a core will likely remain competitive. The majors also continue their aggressive expansion plans.” Ore with 62 percent content delivered to Qingdao, China dropped 1.5 percent to $82.55 a ton yesterday, according to data from Metal Bulletin Ltd. The price fell to $77.97 on Sept. 29, the lowest level since September 2009. “In a declining price environment, the winners should be those with high-quality ore, delivered at low cost to China,” the analysts said. “Here the majors Rio Tinto and BHP Billiton appear best placed.” Global seaborne output will exceed demand by 26 million tons this year and 41 million tons in 2015, according to UBS. The glut is seen at 105 million tons in 2016 and will rise to 223 million tons by 2018, according to the bank. Fortescue Metals Group Ltd. (FMG) said that shipments rose 66 percent in the three months to Sept. 30 as it expanded output from Western Australia mines. The world’s fourth-biggest exporter expects to ship 155 million to 160 million tons in the year through June, it said. Global iron ore suppliers are locked in a battle for market share as a surplus expands, according to UBS AG, which cut price forecasts for 2015 and 2016 while sticking with a call for an end-of-year rally this quarter. The steelmaking raw material will average $85 a metric ton in 2015 and $82 in 2016, analysts including Daniel Morgan said in a report received today. Previously, the outlook for both years was an average of about $103 a ton. Iron ore will rally toward $100 this quarter as mills restock, the bank said. Iron ore tumbled 39 percent this year after companies including Rio Tinto Group (RIO), BHP Billiton (BHP) Ltd. and Vale SA raised low-cost output in Australia and Brazil, spurring a glut. The global market is in the midst of a transition without precedent in recent commodity history as supply surges and some higher-cost mines are displaced, according to Macquarie Group Ltd. 9