Sesa: The Market Is Stabilizing

On Bloomberg news: Sesa to More Than Triple Ore Output on China Demand

• By Debarati Roy
  
  Oct. 21 (Bloomberg) -- Sesa Goa Ltd., India’s biggest iron- ore exporter, will more than triple production because of a rebound in prices and demand from China and diversify into making steel, Managing Director P. Mukherjee said.
  
  Output will be increased to 50 million metric tons from the current 15 million tons in the next two to three years, P. Mukherjee said in an interview. The Goa-based company is increasing production at its existing mines and looking to acquire reserves in India and overseas, he said.
  
  China, the world’s biggest consumer of iron ore, may buy 20 percent more than forecast next year, the Canberra-based Australian Bureau of Agricultural and Resource Economics said on Sept. 22. China may import 637 million tons of ore in 2010, compared with a June prediction of 529 million tons.
  
  “The market is stabilizing,” Mukherjee said late yesterday, after the company announced a 51 percent drop in second-quarter profit. Prices, which fell to an average $50 a ton in the quarter from $95 a year ago, are improving, he said.
  
  Sesa shares fell as much as 8.9 percent to 316.60 rupees and traded at 329.55 rupees as of 10:05 a.m. in Mumbai. The stock has more than quadrupled this year, compared with a 78 percent gain in the benchmark Sensitive Index.
  
  Steel Slabs
  
  Sesa Goa has shortlisted some locations to set up a 1 million ton plant to produce steel slabs in the eastern state of Jharkhand, Mukherjee said, without giving investment and time details. Steel slabs are made into steel plates and strips.
  
  Profit declined to 1.66 billion rupees ($36 million) in the three months ended Sept. 30 from 3.37 billion rupees a year earlier, Sesa Goa said in yesterday’s statement. Revenue fell 32 percent to 6.32 billion rupees, while volume sales rose 17 percent, Mukherjee said.
  
  Iron-ore swaps for settlement this month traded at $85.25 a ton yesterday, according to SGX AsiaClear over-the-counter prices from Singapore Exchange Ltd.
  
  China’s steelmakers are buying more iron ore, their main raw material, as the government implements a $586 billion stimulus spending. The economy is forecast to expand 8.2 percent this year, compared with a March estimate of 7 percent, the Asian Development Bank said last month, easing concern that the nation may slow raw-material imports.
  
  The Baltic Dry Index, a measure of shipping costs for commodities, rose on rising shipments of iron ore to China. The index tracking transport costs on international trade routes gained 66 points, or 2.4 percent, to 2,832 points on Oct. 20, according to the Baltic Exchange. Charter rates for capesize ships, most commonly used to haul iron ore, added 5.4 percent to $44,268 a day

Yeah, as mention in the posting, Baltic Dry Index Stages Strong Rebound ( see also Baltic Dry Index May Surge More Than 80 Percent! ), BDI had been a tear lately.