Thailand to extend controversial rice intervention for 3rd yr

Mon May 27, 2013
* Move will help rival exporters such as India, Vietnam

* Thailand no longer world's No.1 rice exporter

* Extension had been widely expected
By Apornrath Phoonphongphiphat
CHIANG MAI, Thailand, May 27 (Reuters) - Thailand has pledged to renew its controversial rice-buying scheme for a third year, defying opposition over a policy that has been blamed for straining government finances and slashing exports as the grain has piled up in warehouses

The two-year old programme to pay farmers more for rice than it is worth on international markets has cost Thailand its spot as world's top exporter and provoked concern at the World Trade Organization.

"We will be continuing with the scheme, with which we aim to go on supporting farmers. At this stage, we see no change in the intervention," said Commerce Minister Boonsong Teriyapirom, confirming a move that had been widely expected by market participants.

The government has spent 410 billion baht ($13.70 billion) in buying paddy since the scheme kicked off in October 2011, and has been looking at measures to stem ballooning losses so far estimated by analysts and industry officials to be at least $6 billion.

Boonsong added that Bangkok would largely be able to finance the scheme through sales to other governments, avoiding taking out loans for funding.

The government has said that has sold up to 7.3 million tonnes of rice from stocks to foreign governments, including China, Bangladesh and the Philippines. However, all buyers have denied the deals and traders said activity at ports did not suggest big deliveries.

"It is not very surprising as the government is committed to buying rice from farmers and it can't really go back on that," said a trader with a Singapore-based grains trading company.

"What this means is for the market is that the scheme will result in more rice stocks piling up in government silos. Other exporters ... will continue to take advantage of Thailand pricing itself out of the market."

Rival producers such as India and Vietnam, who have stepped into the vacuum caused by the exit of Thai exporters from the market, are watching closely in case Thailand is forced to dump millions of tonnes of rice onto well-supplied global markets, driving down prices.

Thailand pays farmers 15,000 baht a tonne of paddy, or around 50 percent above market prices, pushing Thai export prices for common grade white rice to $550 a tonne, or around $170 per tonne higher than the offers from India, Vietnam and Pakistan.

Uncompetitively high prices cut Thai exports sharply to 6.9 million tonnes in 2012, well below a record 10.6 million tonnes in 2011.

India has taken No.1 spot as the world's biggest rice exporter from Thailand for the first time since 1983, with 10.2 million tonnes in 2012.

Vietnam stayed as the second-biggest exporter with 7.7 million tonnes, with Thailand relegated to third position.

($1 = 29.9300 Thai baht) (Additional reporting by Naveen Thukral in Singapore; Editing by Joseph Radford)

China steel drops to near 9-month low, may hit iron ore

Mon May 27, 2013
* China steel output down slightly in mid-May -CISA

* Outlook for steel demand dimmed by slow China economy
By Manolo Serapio Jr
SINGAPORE, May 27 (Reuters) - Chinese steel futures dropped more than 2 percent to their lowest in almost nine months on Monday, pressured by soft demand in the world's biggest steel consumer whose economic recovery may be at risk of stalling.

Data last week showing China's factory activity shrank for the first time in seven months in May has cast doubts on the already tepid recovery in the world's No. 2 economy, dimming the outlook for steel demand and consequently Chinese appetite for the raw material iron ore.

The most traded rebar contract for October delivery on the Shanghai Futures Exchange closed 2.1 percent lower at the day's low of 3,496 yuan ($570) a tonne, its weakest since Sept. 7, 2012.

Steel demand slowed further last week in some parts of China due to heavy rains ahead of the seasonally weak consumption period that usually starts in June, a Shanghai-based iron ore trader said.

"Mills are just not getting enough orders so their inventories keep building up. At some point they would need to cut output sharply otherwise they would be facing some cashflow problems."

China's daily crude steel output eased only slightly to 2.185 million tonnes in mid-May from a record pace of 2.193 million tonnes in the first 10 days of the month, industry data showed on Monday.

China's excess steel capacity is depressing prices more now than in recent years because the economy is growing at a slower pace than the double-digit clip over the past decade. Mills are also cautious about cutting production steeply as they need to keep their market share in a fragmented sector.

China's gross domestic product grew by a smaller-than-forecast 7.7 percent in the first quarter and analysts say recent weak data may keep growth under 8 percent in April-June.

If the decline in steel production is sustained, that could curb Chinese appetite for imported iron ore. Spot iron ore prices are already down by more than a fifth from this year's peak levels.

Benchmark 62 percent grade iron ore .IO62-CNI=SI last stood at $123.20 a tonne on Thursday, according to data provider Steel Index, just off the 2013 low of $123 reached earlier last week. The price hit a peak of $158.90 in February, a 16-month high.

There was no price assessment on Friday due to a public holiday in Singapore.

"In the past weeks, people were looking at $120 as the bottom price. But now it seems that a lot of people are looking at $110-$115. The sentiment's bearish," another Shanghai trader said.

"We have almost cleared all our stocks and we're not buying any cargo. We are quite pessimistic, we think the market will fall further."

($1 = 6.1316 Chinese yuan) (Editing by Muralikumar Anantharaman and Himani Sarkar)

Iron ore traffic at Paradip could rise

OUR BUREAU, THE HINDU BUSINESS LINE
May 26, 2013: 
If the latest trend is any indication, the iron ore export through Paradip port, which dropped significantly in the past couple of years, appears set to rise again, though slowly. Iron ore is an important component of the port’s traffic. In April, the iron ore throughput was 4.63 lakh tonnes against 1.27 lakh tonnes in the same period a year ago. In April Paradip port posted total traffic growth of 42.74 per cent at 5.82 million tonnes, the highest among all major ports during the month. No wonder, the port authorities have started allotting plots to iron ore exporters for storage purpose.

As many as 20 bidders had responded to the port’s open tender inviting offers for 15 plots and finally five of them withdrew. It might be noted that the court cases involving 48 other iron ore plots allotted earlier are creating problems because unless these plots are vacated the work on two build-operate-transfer berths, one for iron ore and the other for coal, can not be started. The port authorities, it is learnt, are examining various options to start the work on the iron ore berth early and the options might include even inviting fresh bids as the response of the present successful bidder leaves much to be desired. The mechanisation of three berths, EQ 1, EQ 2 and EQ 3 through public-private-partnership, is receiving top priority, according to S.S. Misra, Chairman of Paradip Port. He indicates that preliminary level discussion in this regard is in progress with a few public sector companies. The acquisition of two mobile harbour cranes too is high on the agenda, he adds.

Govt may offer soft loans to steel makers for Afghan project

By PTI | 26 May, 2013,
NEW DELHI: The government is considering offering concessional finance to the SAIL-led consortium for developing iron ore deposits at Hajigak in Afghanistan and creating the necessary infrastructure, sources said.

The amount and ways of financing from the government side may be decided at a meeting of the co-ordination committee of secretaries, convened by Cabinet Secretary Ajit Kumar Seth, on May 31, sources said.

A soft loan is one with a below-market rate of interest and may also include concessions like long repayment period or interest holidays.

After winning the bids in November 2011, the seven-member consortium of domestic steel firms, AIFSO, had said it would invest USD 10.8 billion in the war-torn country for setting up steel and power plants and creating necessary infrastructure.

It, however, recently decided to scale down the size of the proposed steel plant in first phase to 1-2 million tonnes per annum (mtpa) from 3 mtpa to reduce the vulnerability of the project.

However, the creation of necessary infrastructure such as 200 kms each rail, road and transmission line network for the mine and steel project is not a choice, but a necessity, the sources said.

AIFSO needs financial support for the creation of the infrastructure from the government as the chances of getting loans from banks is almost bleak since lenders are wary of exposure to the war-torn country, they said.

The consortium had earlier said the immediate investment of USD 75 million, mainly for geological and exploration study of the mines, having an estimated resource base of around 1.8 billion tonnes iron ore, will be met internally by consortium members in the same proportion of their partnership.

This study would take nearly three years for completion, but infrastructure has to be put in place in tandem with the development of the mines for evacuation and transportation.

Tata Steel's Canadian ore project to begin production this yr

By PTI | 26 May, 2013,
NEW DELHI: Tata Steel is planning to begin production from one of its iron ore projects in Canada by year-end, a move that will boost raw material supplies to its European operations.

As per the plan, production from Direct Shipping Ore (DSO) Project, in which Tata Steel holds 80 per cent stake, is expected to begin during the October-December quarter. A target of 1 million tonnes (MT) of iron ore has been kept for the current fiscal.

The production will be ramped up to over 3 MT in 2014-15, Tata Steel said in a presentation posted on its website.

"Trial production (was) successful in 2012 with initial mining and dry processing of 63 per cent iron grade ore. Plan for 1 MT of iron ore in FY'14, to be ramped up to over 3 MT in FY15," the company said, adding that it has obtained various permits, approvals and environmental clearances.

The DSO Project is run by Tata Steel Minerals Canada Ltd and contains 64.1 MT of proven and probable reserves having an average grade of 58.8 per cent iron. It also has about 60 MT indicated, inferred and historical resources of various grades of iron.

Tata Steel has the commitment to invest about 300 million Canadian dollars on the DSO project.

In a recent update, New Millennium Iron Corporation --the 20 per cent partner in DSO Project-- said that construction of the processing complex and ancillary facilities are expected to be completed during the October-December quarter of 2013 and then, first production will happen.

Iron ore from the project will be shipped to Tata Steel's European operations as pellets and sinter fines. Tata Steel had already made a commitment to take 100 per cent of the DSO project's iron ore products for the life of the mining operations.

Besides the DSO project, Tata Steel also has 26.3 per cent stake in Canadian firm New Millennium Iron Corporation and 51 per cent stake in Howse iron ore deposit of Labrador Iron Mines.

Tata Steel Minerals Canada Ltd is also involved in the development of New Millennium's LabMag-KeMag iron ore deposits, which together have proven and probable reserves of 5.6 billion tonnes of low grade iron ore.

According to New Millennium, the preliminary feasibility study report of the LabMag and KeMag deposits has been received and after preparation of the final report, it will be present before the Boards of the two companies.

The LabMag-KeMag deposits are one of the crucial links for the raw material security of Tata Steel's European operations, which does not have any captive mine of its own.

NTPC Coal Imports Said to Double on Shortage: Corporate India

By Rajesh Kumar Singh - May 27, 2013
Bloomberg
NTPC Ltd. (NTPC), Asia’s second-biggest power utility by value, will almost double purchases of coal from outside India this fiscal year to curb fuel shortages at its plants, said two company officials familiar with the plans.

The state-run Indian company will import 17 million metric tons of thermal coal in the year started April 1, compared with 9 million tons the previous year, the people said, asking not to be identified as they are not authorized to speak to the media. NTPC’s plants in the states of Uttar Pradesh, Odisha, Chhattisgarh and Andhra Pradesh face a shortage of coal.

Power producers in India are relying on imports of the fuel to bridge a shortfall in shipments from Coal India Ltd. (COAL), the nation’s monopoly supplier. Land acquisition hurdles and delays in federal approvals for mines are depriving power plants of coal supplies and keeping almost 400 million in the world’s second-most populated nation without electricity.

“Increasing imports has become a must for NTPC since many of its plants are running with alarmingly low coal stocks,” said Lakshminarayana Ganti, an analyst at Standard Chartered Securities India Ltd., who has an outperform rating for the stock. “Adequate fuel availability is critical to NTPC’s earnings.”

Sales in the three months ended March 31 increased 1.2 percent, the slowest pace in almost three years, because of the lack of coal. Revenue may rise 11 percent to 177 billion rupees in the quarter ended June 30, according to an average estimate of two analysts compiled by Bloomberg.

NTPC shares rose as much as 1 percent to 151.50 rupees and traded at 150.90 rupees as of 9:19 a.m. in Mumbai, trimming this year’s decline to 3.7 percent. The benchmark S&P BSE India Sensex (SENSEX) has gained 1.5 percent this year.

Critical Stocks

More than 33 power plants in the country, with a total generation capacity of 31,320 megawatts, had coal stocks of less than seven days as of May 21, according to the power ministry’s Central Electricity Authority, which monitors the development and operation of power plants in the country. Stocks of less than 15 days are considered critical.

Of NTPC’s 15 coal-fired plants that have a combined capacity of about 31,855 megawatts, units generating more than 7,000 megawatts don’t have any fuel-supply accord with Coal India. These units receive coal on the basis of an agreement that doesn’t include any penalty clause for a drop in quantity.

NTPC said on April 4 Coal India doesn’t supply the grade of coal it is paid for and it will sign accords for those units only if the miner assures a “minimum grade” of coal.

“Coal availability at plants that do not have a fuel-supply agreement with Coal India is a big issue,” Ganti said. “In the near-term, the big catalyst for the stock would be signing of these accords.”

Power Generation

The utility generated 60.3 billion kilowatt hours of electricity in the three months ended March 31, little changed from a year earlier, despite adding generation capacity. Production stagnated because of a 10 percent drop in coal imports, Chirag Shah and Anuj Upadhyay, analysts at Mumbai-based ICICIdirect.com wrote in a May 13 note. NTPC added 4,160 megawatts of generation capacity in the year ended March 31.

Imported coal is especially critical for those plants that have yet to sign the fuel supply accord with Coal India.

Declining international prices are also encouraging Indian power producers to import coal. Indonesia, the world’s biggest exporter of power-station coal, cut its reference thermal coal prices by 3.65 percent for May, bringing them to the lowest level in five months.

Indonesian Prices

“Falling international coal prices and a lack of availability from domestic sources is fueling India’s coal imports, said Ashish Sethia, country manager, India at Bloomberg New Energy Finance.

Indonesian reference prices for this month stand at $85.33 a ton for coal of 6,322 kilocalories per kilogram. Coal India’s price for the grade is 3,970 rupees ($71.50) a ton.

NTPC has placed an order for 7 million metric tons of imports, the people said. Adani Enterprises Ltd. (ADE), the nation’s biggest thermal coal importer, won the tender for 4.5 million tons, while state-run trading company MMTC Ltd. (MMTC) won the bid for 2.5 million tons, they said.

The utility will import another 10 million tons in two phases during the year, the people said.

Kumar Mangalam Birla to turn Essel Mining into India's largest coal developer

By Sabarinath M, ET Bureau | 27 May, 2013
MUMBAI: Aditya Birla group chairman Kumar Mangalam Birla is turning his private mining company Essel Mining into India's largest developer of coal mines by producing large quantities of coal from mines owned by Coal India Ltd. The unlisted iron ore mining firm's joint venture company Bhubaneshwari Coal Mining Project produced 11.4 million metric tonne per annum of coal from Coal India's subsidiary Mahanadi Coalfield's mine in Angul district of Odisha.

"This is by far the largest coal mining output from a single location. And this was achieved in the very first year of 2012-13. We are targeting to achieve 20 mmtpa by 2015,"said Tuhin Mukherjee, managing director, Essel Mining.

The focus on coal mining is an attempt by the group to strengthen the core business of Essel Mining and boost its profitability. The cash-rich mining outfit, which is fully owned by Kumar Mangalam Birla's family and started as a small mining firm in 1950, is cashing in on Coal India's move to outsource mining rights to a private developer. Since Coal India owns the mines, the developer will have to transfer the final output to the public sector company.

Mukherjee, who joined the $40 billion group in December 2010 to lead the mining business after several years in Coal India, has built a 1000-strong workforce to handle coal mining projects. RS Malhotra, Mukherjee's former colleague in Coal India, has joined as the COO to manage and expand the business through mine-developer-cum-operator route (MDO).

Essel Mining has also secured a mining contract from Coal India's arm Eastern Coal fields to develop 17 mmtpa in Jharkhand. As the country faces a shortfall in coal production, public sector coal majors such as Coal India has been taking the MDO route to ramp up production. NTPC's Pakri Barwadih mine, Pars East-Kente basin owned by state utilities are among other coal assets given for development through the MDO route. The new business model helps companies like Coal India to focus on business development.

The private contractor has to go through the laborious process of planning, processing and evacuation before the final output is delivered. For instance, joint venture company Bhubaneswari Coal Mining has removed 10.77 million cubic meters of rock to produce 11.44 mmtpa of coal. The MDO model is likely to metamorphose into a public private partnership.

Finance minister P Chidambaram announced in his budget speech that the government is working on a policy to usher in public-private partnership to reduce dependence on imported coal. The new policy will have Coal India as one of the partners, he had said.

"Though Coal India has abundant mine reserves, it has not been able to boost production in a big way. While its production was around 6% during FY 2012-13, it posted only marginal growth during the three successive financial years before the last financial year. ''The only way to guarantee adequate coal supply to consumers like power and fertilisers producers is by ensuring private sector participation. The policy makers, however, should develop the right model to bring transparency. They can look at offering equity in the project based on certain milestones. Private sector participation will lead to faster execution," said Sonam Udasi, head, research, IDBI Capital. ''Global mining majors are looking to gain a foothold in India through government partnerships. But, the lack of equity participation in projects is holding them back.

"Economic ownership should be clearly defined for global participation in the mining sector,"said an industry expert who does not want to be quoted.

Majority of India's huge mineral resources were owned by private sector players till 1970. The first sign of government control emerged in 1971 when the coking coal assets were nationalised except for mines owned by Tata Steel and Steel Authority of India. This was followed by nationalisation of thermal coal assets in 1973 except for the assets owned by Tata Steel and Damodar Valley Corporation. All these assets were consolidated under a single entity to form Coal India in 1975.

Merchant Shipping Act to be amended. The govt to accommodate two more International Maritime Organisation conventions

Ruchika Chitravanshi  |  New Delhi  May 6, 2013
Business Standard
The Indian shipping industry is all set to endorse two more International Maritime Organisation (IMO) conventions, with the Union shipping ministry getting Cabinet nod to ratify both conventions. They will be adopted after a Bill amending the Merchant Shipping Act is approved by Parliament.

One of the conventions is the anti-fouling systems convention, which came into force on September 17, 2008, and prohibits the use of harmful paints on ships.

One of the primary aims of the IMO when it was created in 1948, was to control pollution created by maritime trade. With more stress on sustainability than ever before, the international organisation is pushing countries to fall in line with the best green practices.

"The anti-fouling convention prohibits the use of harmful organotins (compounds containing carbon) on the hull of the ships or external surfaces. Most Indian ships already follow this system," a senior shipping ministry official said. The use of such paints is believed to harm marine life and therefore, the overall environment. The convention has been ratified by 65 countries so far.

"It is a good move, because it will now enable India to enforce these rules on any vessel that calls on Indian waters. Most Indian shipowners already follow these conventions regardless of whether our flag state ratifies these or not, since we are working in a global environment," said Anil Devli, president, Indian National Shipowners Association.

According to the IMO, 2.7 per cent of man-made emissions are caused by ships. It aims that ships should bring down these emissions by 20 per cent by 2020 and by 50 per cent by 2050.

The second is the maritime labour convention of 2006, assuring a better work environment for seafarers, mooted by the International Labour Organisation. The convention provides comprehensive rights and protection at work for more than 1.2 million seafarers of the world. The convention "aims to achieve both, decent work for seafarers and secure economic interests in fair competition for quality shipowners."

Of the total 55 IMO conventions, India has so far ratified 33.

For the Indian shipping industry which has been in the red due to poor freight rates and rising fuel costs, meeting the IMO standards could prove to be another challenge.

"Cost of compliance will manifest. Most conventions have been signed and the time to bring them into force is now close. If companies don't comply, there could be trade repercussions," said Hemant Bhatt, senior director, Deloitte India.

CONVENTION CALL
| The Union shipping ministry will get Cabinet nod to ratify two more International Maritime Organisation conventions
| The first is the anti-fouling systems convention, which came into force on September 17, 2008, and prohibits the use of harmful paints on ships
| The second is the maritime labour convention of 2006, assuring a better work environment for seafarers, mooted by the International Labour Organisation
| Of the total 55 IMO conventions, India has so far ratified 33
| For the Indian shipping industry which has been in the red due to poor freight rates and rising fuel costs, meeting the IMO standards could prove to be another challenge

P&I Club letter: An easier option for arrested ships

JOY THATTIL, THE HINDU BUSINESS LINE

SECURITY FOR RELEASE

May 5, 2013: 
In India, the law relating to arrest of a ship has been evolved mainly by the judiciary rather than the legislature. Indian judiciary has witnessed a steady rise in the number of maritime disputes in which the involved parties explore the possibility of getting the vessel arrested. Although the procedure is cumbersome, it is relatively quick to obtain an arrest in urgent situations.

Immediately after an order of arrest is issued by a court of law, the ship becomes security in the custody of the court until an alternative security is furnished or the ship is sold. The main purpose of arrest of the vessel is to obtain security for the satisfaction of a judgment in the action in rem. The arrest of the vessel is only a provisional remedy and its purpose is merely to detain the ship until the matter has been finally settled by a competent court. In other words, the real purpose of arrest, in both the English and the Civil Law systems, is to obtain a security or a guarantee for satisfaction of the Decree.

Courts in several countries accept the letter of undertaking (LoU) issued by Protection and Indemnity (P&I) Clubs as security for release of arrested ship. International P&I Clubs, most of which are over 100 years-old, provide insurance cover to ocean-going vessels. Getting an LoU from them is faster than getting a bank guarantee.

BANK GUARANTEE

However, the Indian courts exercising admiralty jurisdiction recognise and accept only bank guarantees issued by nationalised and scheduled banks or foreign banks in India with an office in Kolkata, Chennai or Mumbai where the warrant of arrest is issued.

The Indian courts maintain the view that security for the claim in the suit is to be furnished by cash deposit in the registry or a bank guarantee for the amount stated in the warrant of arrest. However, the plaintiff in an admiralty suit is at liberty to accept a letter of indemnity issued by a P&I club.

Indian courts normally decline to accept letter of undertakings from P&I Clubs, delaying the release of arrested ships since obtaining a bank guarantee takes more time. Interestingly, a bank giving a guarantee will itself require an acceptable counter-guarantee from a bank abroad.

Getting a bank guarantee for release of the arrested vessel is also more expensive since banks charge 0.25 to 1 per cent of the amount as commission. Besides, it takes more time to obtain a bank guarantee, especially when more than one bank is involved.

The principal advantage of a Club LoU, from the ship-owners’ point of view, lies in its ease of issue and flexibility regarding content. Once a security demand is put forward, a Club LoU can be issued as soon its terms have been agreed, formulated and signed, then communicated by fax or e-mail around the globe in minutes. Another advantage of a Club LoU, from the claimant’s perspective, is that he or she obtains a right to recover his claim directly from the Club. It is important that a Club LoU balances the respective interests, that is, securing the claim without jeopardising the defendant’s rights and defenses.

There are many instances in which even the English Courts have shown the reliability of P&I letter of undertaking, In the recent case of The Durban Court, following the ratio decidendi of the Supreme Court of Appeal which had held, in a different context that “security” under the Act included a bank guarantee, stated that, “…the bank guarantee as well as the P&I Club Letter of Undertaking are couched in similar terms. They are both private contractual undertakings given by either the bank or Club/insurance company to secure an applicant’s claim against a respondent either before or after arrest.”

The Courts in India have a history of following pragmatic customary precedents in rest of the world and there is hope that bank guarantees would be substituted by LoUs from P&I Clubs, thereby obviating complicated procedures involved in settlement of maritime claims to a considerable extent.

(The author is a Kochi-based maritime lawyer.)

Adani Ports in talks with Tatas for cargo handling at Dhamra

By Manu Balachandran, ET Bureau | 6 May, 2013
MUMBAI: Adani Ports and Special Economic Zone has started discussions with Tata Steel regarding the terms of handling cargo at Dhamra Port in Orissa, a port which is jointly owned by Tata Steel and Larsen and Toubro , signaling a significant move towards acquiring a strategic control of the port.

Adani Port held discussions with Tata Steel last week regarding cargo handling at the port. Tata's arm TM International Logistics currently manages the port.

In a meeting held on Thursday, senior officials of Tata Steel and Adani Ports met at Bombay house, the head office of Tata Group to undertake due diligence and have also expressed their opinion regarding the cargo handling at the port.

According to the officials, Adani Port is said to have raised certain concerns regarding the cargo handling policy at the port in terms of warranties, damages and liabilities which seems to be in favour of the Tata Group. The companies are now studying the terms and conditions and are expected to meet soon to make a final decision.

"Adani Ports said that the terms and conditions of cargo handling at the port seem to be tweaked in favour of Tata Group. Since Tata Group is the biggest customer at Dhamra Port, these concerns need to be solved before Adani makes any offer regarding the port," said a person who attended the meeting.

L&T had earlier said that the port is a non-performing asset for the company and was looking for potential buyers. "The deal looks like it is inching closer to be completed and a final decision will be taken at the promoter-level soon," the official added.

Adanis and Tata have such business arrangements for other group businesses. The two groups have an arrangement wherein Tata Power uses Adani Port's facility in Mundra to import coal required for its 4,000 MW ultra power project (UMPP) in Gujarat. A spokesperson for Adani Group declined to comment on the matter while Tata Group said that they do not respond to market speculation and rumours.

Dhamra Port's project cost is about Rs 3,600 crore and it reported a total income of Rs 198 crore for the financial year ended 2012 with a net loss of Rs 458 crore. The port has been developed under the build-own-operate-share and transfer model with a concession from Odisha government for 34 years and commenced operations in May 2011.

But the port, which has a significant advantage in terms of its location on the east coast, especially with rising cargo from India to China has been struggling due to infrastructure constraints, including road and rail connectivity.

"Dhamra Port has huge potential on the east coast as it caters to the eastern and north-eastern hinterland in a big way. Kolkata and Haldia Ports are facing depth problems and capacity constraints. In this regard, Dhamra can provide better economies of scale and become an alternate gateway," said Anand Sharma, director at Mantrana Maritime Advisory.

Dhamra Port handled 5.1 million tonnes of cargo during 2012 and Tata Steel had developed the port due to its location, which was ideal for shipment of minerals and raw material for steel plants in the region.

Adani Port is the country's largest private sector port and had recently stated that the company was looking to utilise more than $235 million (Rs 1,300 crore) that the company received from divesting its stake in Abbot Point Coal terminal in Australia to fund its expansion plans in the country's east coast.

Adani Ports had divested some of its stake in Abbot Point Terminal to the Adani family, the promoters of the firm, to focus on its expansion plans in India. Adani Port had acquired Abbot Point Coal Terminal in Australia in 2011 for $2 billion. "We will receive more than $235 million from divesting our stake in the company to the Adani family. The fund will be available for our expansion plans on the east coast of India and can also be used to reduce our debt, B Ravi, CFO of Adani Ports, had told ET earlier.

The company had also recently solved a long-awaited concern with the home ministry after the ministry decided to grant security clearance to the company to participate in port projects in the country.

Adani Ports could not participate in public-private partnership projects in the country as the home ministry had barred the company from participating in the projects due to undisclosed reasons. The denial cost the company the chance to participate in port projects worth Rs 20,000 crore in the past three years.

With the security clearance now in place, Adani is expected to bid for a number of port projects that the ministry of shipping is looking to award this year at an estimated cost of Rs 30,000 crore.

Shanghai steel extends gains, ore near 5-month low

Mon May 6, 2013
SHANGHAI, May 6 (Reuters) - Shanghai steel futures rose more than 1 percent on Monday, tracking a broad rally in commodities markets fueled by strong U.S. employment data, though concerns
about steel demand in top user China persisted.

A fragile recovery in China's economy is expected to curb steel demand growth in the world's biggest steel producer, with high output adding to concerns on prices and weighing on raw
material iron ore.

"There is no strong anticipation of solid recovery in China's economy in the second quarter, and the overall steel market fundamentals remain weak, so I would expect not much
upside for steel prices," said Ding Rui, an analyst with Zhongcai Futures in Shanghai.

The most active rebar futures for October delivery on the Shanghai Futures Exchange climbed 1.4 percent to 3,628 yuan ($590) a tonne by the midday break, still not far from a
near 8-month low of 3,530 yuan hit on Thursday.

Growth in China's services sector, as measured by the HSBC Services Purchasing Managers' Index, slowed sharply in April to its lowest point of 51.1 since August 2011, fresh evidence that
economic revival will remain modest and may be facing wider risks.

With few signs of a rapid recovery in steel demand in the near future and limited buying of spot cargoes from mills, iron ore prices hit near five-month lows on Friday, the biggest
weekly fall in seven weeks and also the third straight weekly drop.

Benchmark 62 percent grade iron ore .IO62-CNI=SI sagged 1 percent to $128.1 a tonne on Friday, according to data provider Steel Index.

"I would expect another down week for iron ore as it looks like steel demand will not improve largely in near term," said an iron ore trader in Shanghai.

Iron ore inventories at main Chinese ports were 68.16 million tonnes on May 3, up 130,000 tonnes from the previous week, data from industry website Mysteel showed.

The easing of tight iron ore supply from Australia is also likely to weigh on prices.

Exports of iron ore to China from Australia's Port Hedland, used by BHP Billiton, Fortescue Metals Group and Atlas Iron, climbed 1 percent to 19.3 million tonnes in April from March.

U.S. nonfarm payrolls rose by 165,000 in April, hiring was much stronger in the past two months than initially reported and the jobless rate fell to a more than four-year low of 7.5
percent.

  Shanghai rebar futures and iron ore indexes at 0330 GMT
  Contract                          Last    Change   Pct Change
  SHFE REBAR OCT3                   3628    +49.00        +1.37
  THE STEEL INDEX 62 PCT INDEX     128.1     -1.30        -1.00
  METAL BULLETIN INDEX            130.22     +0.00        +0.00

  Rebar in yuan/tonne                                                         
  Index in dollars/tonne, show close for the previous trading day
 ($1 = 6.1556 Chinese yuan)

(Reporting by Ruby Lian and Fayen Wong; Editing by Muralikumar Anantharaman)

Evening markets: grains end firm week on soft note

3rd May 2013, by Agrimoney
Agricultural commodities found headway harder to come by on Friday, even as many other risk assets gained, boosted by positive US jobs data.

US non-farm payrolls increased by a bigger-than-expected 165,000 in April, and there were also upward revisions totalling 114,000 for data for the preceding two months.

The jobless rate fell to 7.5%, the lowest since December 2008.

Shares, for instance, took succour in that, standing 0.9% higher in Wall Street in late deals, after gaining 0.9% in London and 2.0% in Frankfurt.

Brent crude added 1.2% to get back over $104 a barrel.

'No significant system'

But for corn, more than worries over macroeconomic or fuel prices were the concerns over whether the skies will clear for Midwest farmers, allowing them to catch up on corn plantings.

As ever, there were a number of interpretations of the outlook.

"The next week is not completely dry, but there is no significant system until the May 21-23 time period," Darrell Holaday at Country Futures said.

"The lack of drying as the current system meanders east south east at a slow pace is probably the biggest concern, as the longer it hangs on with clouds the narrower the gap to create another planting window."

'Open planting window'

Benson Quinn Commodities also took a broadly optimistic approacjh, saying that once the current low "moves out of the central Midwest over the weekend, warmer and drier weather is expected to set in for most of the Midwest into late next week.

"Planting should progress rapidly once soil conditions improve. There should be a nice 4-6 day window next week for planting to advance in central Midwest and being in the northern plains ahead of the next system.

US Commodities said: "An open planting window will begin Monday/Tuesday for the next six days. This should push seedings to 35% by May 15."

Not that this is a huge rate of completion, of course, by the mid-May period when plantings are late enough to attract yield penalties.

'Major rain event'

However, David Tolleris at WxRisk.com took a more downbeat view, saying that the latest run of the GFS model "has turned back towards the European model solution, and now shows a major rain event for all the Delta and the entire Midwest - including the western Corn Belt and the eastern Corn Belt for the period of May 9-11

"In this case with regard to this next event for the Midwest the European model has been far more consistent," he said, adding that "I think the weather models will hold over the weekend".

Still, other investors were not so sure.

"There is a risk that Sunday night weather updates are less threatening, that will keep end-of-week buying muted," Richard Feltes at RJ O'Brien said.

He added: "Even though upcoming weather is sub-optimal, it looks better than the weather extremes that have buffeted the plains and Midwest this week."

New crop, old crop gap

Many investors decided to take profit rather than bank all on the weather rally continuing, and December corn fell 1.0% to $5.53 ½ a bushel in Chicago, still up 6.7% for the week thanks to the worse-than-expected conditions, including snow across many states, which have slowed plantings this week.

Old crop July corn eased 0.1% to $6.61 ¼ a bushel, still gaining some support from the idea that even if 2013 yields are not reduced by the poor weather, the harvest is at least likely to be delayed, meaning more reliance on thin old crop supplies.

And there was a little bit of that kind of thinking in a strong performance by soybeans too, especially as demand is continuing strong, raising concerns over the availability of crop to cover paper promises.

Are the beans there?

"The story is the same. Strong cash bids by soybean processors who continue to make export sales of soymeal like they have it," Country Futures' Darrell Holaday said.

"The reality is the margins are good if they can get the soybeans bought, but that is the problem."

Old crop July soybeans added 1.1% to $13.87 ¼ a bushel in Chicago, gaining support too by the earlier positive close of the oilseed on the Dalian exchange in China, whose market is being especially closely watched, given the bird flu epidemic and potential damage to the poultry industry and feed demand.

New crop November soybeans added 1.4% to $12.21 ¼ a bushel, helped by the performance of old crop besides a touch of profit-taking, with the contract have suffered from long corn, short soybean spreads.

Thin inventories

Soybeans also received support from its fellow oilseed, canola, after Canada revealed stocks well below market estimates as of the end of March, at their lowest for the time of year since 2005.

That said, canola itself managed a gain of a modest 0.2% to Can$601.40 a tonne in Winnipeg, doing better in Paris, where the August rapeseed contract added 0.7% to E433.25 a tonne.

In wheat too, Canadian stocks were below expectations, also playing to the idea of the extended gap between old crop and new crop supplies caused by cold weather, delayed plantings and therefore likely a delayed harvest.

Minneapolis spring wheat, a proxy for Canadian wheat, certainly did better than winter wheat contracts, but still lost 0.8% to $8.18 a bushel.

As US Wheat Associates noted, even if there is a poor harvest this year, "with carry-in stocks expected to be just more than 5.0m tonnes, buyers can be assured there will be sufficient supplies of high protein, strong gluten US hard red spring wheat available".

'Possible Gasc tender'

Winter wheats fell in part on prospects for rain for the dry southern Plains (depending which commentator you listen to).

Furthermore, while Informa Economics did cut its estimate for the US hard red winter wheat crop, after the wheat tour results from the likes of Kansas and Colorado, the downgrade, to 798m bushels, left its still above that of many other forecasts, such as Lanworth.

Demand hopes have taken a hit too, with the non-appearance of Egypt's Gasc grain authority, which had been rumoured to launch its first tender in months this week, but was deemed to have been scared away by the price rally.

In fact, investors will nonetheless "watch for a possible Gasc tender through the weekend, with more definition being afforded to the market should they indeed tender", FCStone said.

Still, for now Kansas hard red winter wheat for July dropped 1.6% to $7.78 ½ a bushel, still up 3.7% for the week, while Chicago soft red winter wheat for July fell 1.2% to $7.21 a bushel, up 4.1% for the week.

Flat cocoa

Among soft commodities, cocoa appeared to be taking more notice of more cautious price outlooks, the latest from Macquarie.

Cocoa for July set a four-month high of $2,437 a tonne in New York, but fell back to close at $2,416 a tonne, up just 0.1% on the day.

London cocoa for July eased 0.2% to £1,567 a tonne.

But New York arabica coffee for July added 1.0% to 140.90 cents a pound, amid ideas that Brazil will, despite delaying a decision, settle on a rise in support prices which will underpin values.

GRAINS-U.S. corn eases for 2nd day as lower rainfall boosts planting

Mon May 6, 2013
* U.S. corn falls 1.8 pct on lower-than-expected rain

* India lifts wheat crop estimate, may lower prices
By Naveen Thukral
SINGAPORE, May 6 (Reuters) - Chicago corn slid 1.8 percent on Monday, falling for a second straight session as fears over slow U.S. planting were eased by  less rainfall than expected
over the weekend.

Wheat fell in line with losses in the corn market, with additional pressure from forecasts of higher production in India, which is expected to boost exports to trim burdensome
stockpiles.

Meteorologists had forecast wet weather to continue over the weekend, further slowing corn planting. However rainfall was lower than expected, which is likely to encourage farmers to
boost seeding that was running at a record low pace.

"There has been a lot of premium built in corn because of planting delays," said Brett Cooper, a senior markets manager at INTL FCStone Australia. "There is improved weather for corn now
and once farmers get on they can plant very quickly."

The Chicago Board of Trade most-active July corn contract fell 1.8 percent to $6.49-1/2 a bushel by 0327 GMT, but off a low of $6.44-1/2 a bushel hit earlier in the session.

Front-month corn logged steep gains of 8.6 percent last week, rising by the most since last summer's drought, as wet and chilly weather delayed plantings.

The market awaits a weekly crop progress report from the U.S. Department of Agriculture due later on Monday.

The report showed 5 percent corn had been planted as of April 28, down sharply from 49 percent a year earlier and the 31 percent 5-year average.

CBOT July wheat fell almost 1 percent to $7.14 a bushel, after dropping to a low of $7.06. July soybeans added quarter of a cent to $13.87-1/2 a bushel, after rising over 1 percent in the previous session.

The wheat market was pressured by expectations of higher supplies in India.

"Burdensome supplies will ensure India remains a large wheat exporter in the year ahead," Luke Mathews, commodities strategist at the Commonwealth Bank of Australia, told clients
in a note.

India has raised its expectations for this year's wheat output to just short of last year's record, keeping the pressure on the government to cut export prices and reduce stocks in
silos that are already overflowing.

India, the world's second-biggest producer of wheat after China, is expected to produce 93.62 million tonnes of the grain in the year to June, the farm ministry forecast on Friday, down
1.4 percent from 94.88 million last year.

Wheat prices, which rose more than 3 percent last week, have been underpinned by cold weather that has hindered crop development in Kansas, the biggest U.S. wheat state.

Scouts estimated total wheat production in the state at 313.1 million bushels, down 18 percent from 2012. Yield prospects in Kansas averaged 41.1 bushels per acre, according to
the Wheat Quality Council, which led a three-day tour of 570 fields across the state that ended on Thursday.

Before the tour started, analysts had been expecting wheat yields to be 39.4 bushels per acre, according to the average of estimates in a Reuters poll.

Large speculators covered short positions in CBOT corn futures as worries about planting delays reducing the size of the U.S. crop at harvest this fall pushed prices to a one-month
high last week.

The Commodity Futures Trading Commission's weekly Commitments of Traders report also showed that speculators, including hedge funds, raised their bullish bet on soybeans and
narrowed their net short in wheat futures.

  Prices at 0327 GMT
  Contract        Last    Change  Pct chg  MA 30   RSI
  CBOT wheat     714.00    -7.00  -0.97%   868.21   45
  CBOT corn      649.50   -11.75  -1.78%   763.56   58
  CBOT soy      1387.50     0.25  +0.02%  1576.79   60
  CBOT rice      $15.35   -$0.01  -0.03%   $15.48   59
  WTI crude      $96.67    $1.06  +1.11%   $89.20   69
  Currencies                                               
  Euro/dlr       $1.312   $0.083 
  USD/AUD         1.028   -0.027 
  Most active contracts
  Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight
  RSI 14, exponential

(Additional reporting by Colin Packham in SYDNEY; Editing by Clarence Fernandez)

Grain output may touch 255.36 million tonnes

By ET Bureau | 4 May, 2013,
NEW DELHI: India's grain output in the current crop year is expected to be 255.36 million tonnes (mt), over 5 mt more than previous estimates because of higher production of rice, oilseeds and wheat.

In February, grain production was pegged at 250.14 mt for the 2012-13 crop year that runs from July to June. Because of erratic monsoon rainfall, total production is still lower than the previous year's 259.32 mt.

The government makes several estimates of output. The first advance estimate is based on targets set for the year. The second advance estimate is based on firm data of the kharif crop (June-October) production. The third estimate, which was issued on Friday, includes better data on the winter-sown crop also. The fourth advance estimates of foodgrain production would be released by July. As per the third advance estimate for 2012-13, rice production has been revised to 104.22 mt from 101.80 mt in the earlier estimate.

Wheat output, too, has been pegged higher at 93.62 mt, from 92.30 mt in the second advance estimates released in February this year. Similarly, oilseeds including groundnut,castor, sesamum, niger, mustard, linseed, safflower, sunflower and soyabean production was higher by over 1.25 mt at 307.24 mt.

Cotton production is estimated at a record 33.8 million bales (of 170 kg each), similar to the earlier projection for this year.

In the 2011-12 crop year, rice production stood at 105.31 million tonnes, wheat at 94.88 million tonnes, pulses at 17.09 million tonnes and coarse cereals at 42.04 million tonnes.

Too much wheat? Here’s what to do

By ET Bureau | 6 May, 2013,
India's granaries will overflow, with food grain production estimated to touch 255 million tonnes this year. So, it is imperative to export wheat and rice to lower official stocks. The government should go ahead and lower the minimum export price of wheat of $274 per tonne to ship out around five million tonnes of wheat. This makes sense, given that wheat exports have slowed due to a rally in domestic prices, scuttling efforts to make space in warehouses for the new harvest. Mountains of grain are stored in the open, covered only with plastic sheets, and this will rot if the offtake is low. State-run agencies now hold around 60 million tonnes of grain, thrice the buffer stock mandated for food security for April. A harvest bounty is expected to add another 60 million tonnes to this pile. If wheat cannot be exported to run down stocks, it should be used at least as cattle feed.

True, domestic prices of wheat rose sharply for over a year till March this year, thanks entirely to mishandling by the biggest hoarder, the government. Proactive policy including more openmarket sales will help bring down retail prices.

The Centre should also revamp the food management system to allow private trade to procure, store and distribute food grain. Competition will bring down costs, squeeze out the inefficiency of the FCI and cut the food subsidy bill. The government's role should be limited to procurement to maintain the minimum buffer norm. Physical handling of grain, that is prone to pilferage, can be reduced by using warehouse receipts, issued by accredited warehouses to farmers and traders, acknowledging the quality and quantity of produce deposited with them. The government should buy warehouse receipts to ensure that farmers get the minimum support price, while the warehouses take charge of grain storage.

Bunker Prices : 06.05.2013

Source : Bunkerworld.com

	IFO380		IFO180		MDO		MGO
Singapore	618.00		628.00		844.00		854.00
Rotterdam	585.50		605.50		-		825.00
Houston	590.00		661.00		-		984.00
Fujairah	622.50		668.50		-		1,004.00
Los Angeles	607.50		649.00		-		1,019.00
Canary Islands	616.00		636.50		890.00		899.00
Busan	645.50		666.50		892.00		901.50
Genoa	609.50		636.00		-		897.00
Auckland	755.00		-		-		1,075.00
Montevideo	712.50		742.50		-		1,162.50
Guayaquil	665.00		722.00		-		1,429.00
Colombo	660.00		670.00		-		1,070.00
New York	600.50		630.50		-		978.50