Iron ore prices set to cool off by Oct
Financial Express

Indian spot iron ore prices could cool off slightly by October from record highs with mines and ports stepping up operations as annual monsoon rains end, industry officials said on Thursday.

Medium-grade ore from India is now being offered at landed prices above $150 a tonne for Chinese buyers — up nearly 70% from early this year and above Brazilian prices of about $120 to $125. Strong demand from China and port congestion in rival producers Brazil and Australia have largely been driving this surge, but seasonal flooding in India — the world’s third-largest exporter — has exacerbated the problem in recent weeks.

“Right now, prices are at a high level, but I think over the next one month, the rates will start to cool off,” said Rahul Baldota, president of the Federation of Indian Mineral Industries.
Baldota said India exports 5-6 million tonne of ore a month during the rainy season, but that was likely to increase by an additional 2-3 million tonne a month soon. Most go to meet rampant demand in China.

Torrential rains halt iron ore mining in some regions as water accumulates in open cast mines, cutting overall production. Iron ore fines standing at ports during the rains also absorb water, adding to their weight and affecting quality. The monsoon ends in September.

However, a likely 5% — or 2 tonne — fall this year in exports from Goa, the state that accounts for about 40% of India’s ore sales overseas, due to problems with shiploaders at a key port could affect prices.

Cement exports dip 30% on high domestic demand
Business Standard

Buoyant domestic demand and prices of cement, coupled with the rupee’s appreciation, have led to a 30 per cent decline in the country’s cement exports.

Cement exports in the April-July period of the current financial year have declined by almost 30 per cent, from 2.85 million tonnes to 2 million tonnes, according to the data available with the Cement Manufacturers’ Association.

Total cement exports in 2006-07 stood at 8.96 million tonnes. Industry experts estimated this year’s total export to be 20-25 per cent lower than last year.

“Companies are concentrating more on the domestic market which is witnessing an increase in consumption and shortage in supply. Moreover, with an increase in the domestic price the difference between export and domestic realisations has become negligible. Companies are realising 5-10 per cent more in domestic sales vis-a-vis exports,” said J Radhakrishnan, research analyst with India Infoline. The strengthening of the rupee against the dollar has also affected the export margins of cement companies.

On the contrary, domestic consumption has been rising in the same period. Domestic production and despatch in the April-July period of the current year stood at 55.25 and 54.94 million tonnes respectively, up 7.44 and 8 per cent over last year’s corresponding figure of 51.42 and 50.84 million tonnes.

Domestic demand for cement has been buoyant, driven by the enormous infrastructure and housing growth in pockets such as Noida, Gurgaon, Chennai and Hyderabad.

The demand-supply imbalance has also led to measures like removal of import duties by the government so that cement can be imported.

The sustained demand even during the rainy season is something that helped most cement producers to go ahead with a price hike of Rs 3-5 per 50 kg bag in July. Ambuja Cements and Ultratech are the two leading cement exporters and West Asian countries are the main export markets for Indian cement.


LOCAL PUSH

• Cement exports in the April-July period of FY08 have declined by almost 30 per cent, from 2.85 million tonnes to 2 million tonnes, according to data with the Cement Manufacturers’ Association
• Industry experts estimated this year’s total export to be 20-25 per cent lower than last year’s
• Domestic demand for cement has been buoyant, driven by the infrastructure and housing growth in pockets such as Noida, Gurgaon, Chennai and Hyderabad

Stress on PPP model in infrastructure
The Hindu

Finance Minister P. Chidambaram on Thursday stressed that the country’s needs of a developed infrastructure could only be met through public-private partnership (PPP) as the investment to achieve this is required to be raised to eight per cent of the GDP from the current 4.6 per cent so as to sustain a growth rate of nine per cent during the XI Plan (2007-12) period.

Addressing the Parliamentary Consultative Committee attached to his Ministry here, Mr. Chidambaram urged the States to adopt the PPP model in view of the enormous investment needs which could not be met by the public sector alone. He said it was, therefore, imperative that avenues for increasing investment in infrastructure through a mix of public investment, PPPs and through exclusive private investments, wherever feasible, be explored. Apart from freeing government resources for greater investments in other sectors, Mr. Chidambaram pointed out that PPPs would usher in private sector expertise along with efficiencies in operation and maintenance, thus leading to better quality of public services.

In this regard, the Minister asked the committee members to persuade their home States to join the mainstream PPP in infrastructure development and reap full benefits of the various schemes and initiatives of the Finance Ministry.
The Government, he said, had set up the India Infrastructure Project Development Fund (IIPDF) with Rs. 100 crore as the initial corpus to provide financial support to the States’ developmental activities. The fund, he said, would be a revolving one that would get replenished through refund of investment through the ‘success fee’ earned from successfully bid projects. However, he suggested that as many State governments had not caught up with the PPP idea and most projects were confined to just a few States, help could be taken from the panel of 11 expert transaction advisers.

Explaining the importance of the PPP approach, Mr. Chidambaram pointed out that the gross capital formation in infrastructure, as a proportion of the country’s GDP, had remained at about four per cent from 1997-98 to 2003-04. “Our infrastructure deficiencies have become more visible because of high growth. The most visible indicators of overstretched infrastructure are India’s congested highways, airports and ports,” he said.

To achieve the growth targets of the XI Plan, he said the country would have to develop 40,000 km of highways by 2012, increase traffic handling capacity at ports from 737 million tonnes to 1,500 million tonnes, maintain the growth momentum in freight and passenger traffic at 8-9 per cent annually and enhance power generation capacity by 60,000 MW.

According to estimates by the Planning Commission, infrastructure development would need an investment of about Rs. 14,50,000 crore ($320 billion) during the Plan period. To promote PPPs in infrastructure, Mr. Chidambaram informed members that his Ministry had launched a Viability Gap Funding (VGF) scheme while setting up a Public Private Partnership Appraisal Committee and India Infrastructure Finance Company Ltd.

Make core funding 8% of GDP: FM
Financial Express

India needs to nearly double its investment in infrastructure sector from the current level to sustain a 9% GDP growth rate during the 11th Plan period, finance minister P Chidambaram said on Thursday. He said infrastructure investments, as a proportion of GDP, needs to be raised to 8% from the 4.6% at present.

This can be achieved by vigorously pursuing the public-private partnership (PPP) model by state governments, he said addressing the parliamentary consultative committee. The Deepak Parekh committee on infrastructure financing recently revised India's infrastructure spending target to $475 billion (at current prices) from the government's estimate of $320 billion (at 2005-06 prices).

Since the huge investment requirements cannot be met by the public sector alone, Chidambaram suggested states to increase investment in the sector by exploring a mix of public investment, PPPs and occasionally via exclusive private investments.
In addition to freeing the government resources to expand investments in other sectors, he said PPPs bring in private sector expertise and efficiencies in operation and maintenance.

The minister said the government has also set up India Infrastructure Project Development Fund (IIPDF) with an initial corpus of Rs 100 crore to provide financial support to developmental activities in the states.
He said IIPDF would be a revolving fund that would get replenished through the refund of 'investment' through success fee earned from successful bid projects.

He also asked members of the parliamentary panel to persuade their respective state governments to join the mainstream PPP in infrastructure development to take full benefits of the various schemes and initiatives of the finance ministry. Investment in infrastructure has remained at around 4% as a proportion of GDP from 1997-98 to 2003-04, Chidambaram said. He added, "Our infrastructure deficiencies have become more visible because of high growth. The most visible indicators of overstretched infrastructure are India's congested highways, airports and ports."

To meet 11th Plan economic growth targets, he said, the country would need to develop 40,000 km of highways by 2012, increase traffic handling capacity at ports from 737 million tonne to 1,500 mt, maintain the momentum of growth in freight and passenger traffic at 8-9% annually and enhance power generation capacity by 60,000 mw.

He said the government has launched Viability Gap Funding (VGF) scheme and set up Public Private Partnership Appraisal Committee and India Infrastructure Finance Company Ltd to promote the private and public investment in infrastructure sector.
The appraisal mechanism for the PPP projects has also been streamlined to ensure speedy appraisal of projects.

FM implores states to embrace PPP model for core sectors
Indian Express

While public private partnership projects have taken off smoothly on a national level, Finance Minister P Chidambaram has expressed concern that many of the state governments have yet to embrace the PPP idea, with most of the projects being confined to some states only. As such, the minister has urged the members of the parliamentary consultative committee attached to his ministry to persuade state governments to mainstream PPPs in infrastructure development and take advantage of various schemes being offered by the ministry.

Chidambaram said that infrastructure deficiencies in the country have become more visible as a result of a high economic growth rate. Traffic at ports has grown at a 13 per cent rate, air passenger movement at 25 per cent and air cargo at 10 per cent. To meet the Eleventh Five Year Plan (2007-12) growth requirements, 40,000 km of highways need to be developed by 2012 and the present capacity of 737 million tones (mt) at ports has to be doubled.

With the Deepak Parekh report projecting an investment of $475 billion in infrastructure over the next five years, it is necessary to bring in private partnership into the sector. Chidambaram said that states should avail of initiatives like the Viability Gap Funding (VGF) and the Public Private Partnership Appraisal Committee (PPPAC). He added that since its constitution in January 2006, the PPPAC has granted in-principle or final approval to 28 projects, with a total project cost of Rs 16, 729.28 crore.

Chidambaram noted that the country needs to step up investment in infrastructure and raise it to 8 per cent of GDP from 4.6 per cent to sustain a growth rate of 9 per cent during the eleventh plan. In addition to freeing government resources to expand investments in other sectors, he said, PPPs bring in private sector expertise and efficiencies in operation and maintenance, leading to increase in the quality of public services.

The minister further said that the government has set up the India Infrastructure Project Development Fund (IIPDF) with an initial corpus of Rs 100 crore to provide financial support to developmental activities in the states. IIPDF, he said, would be a revolving fund that would get replenished through the refund of “investment” through success fee earned from successful bid projects.