Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
As Aluminum financing trade becomes less economic,
the build up in exchange inventories will continue
• Backwardation in aluminum causing problems, as financing trade not as
profitable: JPM Global metals analyst Michael Jansen believes that
aluminum financing is becoming a tougher trade to justify and that the
‘magnitude of the material being rolled is just too much for the market to
handle’ ranging between 4-9MT of metal being rolled forward in a calendar
year. Michael believes that over 2011 if time spreads were to remain under
pressure, more and more material would come into LME warehouses (Lead
and Ally have seen sharp increases in LME inventories recently) and this
could probably lead to a ‘downshift in the aluminum prices to reflect the
unmasking of stock held outside the system’. Under such a scenario, Michael
believes that Ally could easily retreat towards the $1900-2100/MT area to
intersect with the upper quartile of the cash cost curve. (Please refer to Base
and Precious Metals Daily, dated Feb, 1, 2011, for more details). For Lead he
believes that from here the lead LME inventory build up would reflect supplydemand
balance as ‘off exchange Western World stocks are lean’. In his view,
given that Chinese lead exports are not competitive given the 15% export tax,
LME lead inventories have limited upside from here.
• Proposed Nippon-Sumitomo merger: Steel mergers seem to have returned
with Nippon and Sumitomo proposing a merger in 2012. JPM Japan Steel
analyst Akira Kishimoto highlights that the proposed merger would strengthen
the steelmakers’ negotiations with customers. JPM Australia steel analyst Ben
Wilson finds it ambitious that consolidation among Japanese steel producers
could have a meaningful impact on the Asian steel supplier structure given
capacity differential between Japan and China. Over the last 12 months as raw
material prices have been shorter duration and moved towards index linked,
steel margins have not held up. In terms of impact in India, we would
highlight that while Nippon is setting up a JV with TATA for auto grade steel,
Sumitomo has been in talks to purchase a stake in an Indian steel company.
• Price check: Steel prices have been broadly stable, though the metals press
(MB, SBB) has carried reports of steel companies looking to re-start some
idled BF. Spot iron ore prices remained stable, though thermal coal price
correction continues. No real trades are taking place in ferrous scrap as of now
• Coking coal- After the floods, comes the cyclone; Upcoming settlement
discussion- As important as the price would be the duration of the
contract: The metals press (MB, SBB) has reported that post cyclone the ports
are coming back to life. While we still have not heard of any material spot
coking coal transaction taking place and hence there is no real validation of the
$400/MT talked about price, we would highlight that spot Chinese coke and
met coal prices are up only 15-20%. We believe, in the upcoming April
contract negotiations, it would be important to see if the miners further reduce
the duration from 3 month to 1 month and/or get an index linked price setting
for coking coal (similar to iron ore).
Metal News Tracker
Steel
Steel companies hike prices in Feb
Steel companies like SAIL and JSW Steel hiked steel prices by Rs2000-2500/MT
effective 1st Feb. Prices were hiked for both long and flat steel products over the last
week. Rising prices of coking coal is continuing to put pressure on steelmakers to
increase prices of their products to maintain margins. Coking coal prices have surged
in the international market since supplies have been disrupted due to floods in
Queensland, Australia, which is one of the largest suppliers of the commodity.
(Business Line and Money Life)
European steel sector starts 2011 well on manufacturing: Eurofer
Regional steel industry group Eurofer said it views trends in European manufacturing
for steel demand as positive while low inventories are helping the sector make a
positive start to 2011. "Stocks at end-users and distributors are still assessed as low to
normal for the current level of downstream activity. The outlook for real and
apparent consumption is for further sustainable growth," Brussels-based Eurofer said
in a statement. Eurofer forecasts real and apparent steel consumption to rise by
around 4% a year in 2011 and 2012. "Indicators signal a continuation of this trend.
Improving capacity utilization will trigger investment in machinery and equipment.
Also construction investment looks set to stop acting as a drag on domestic demand
growth this year. This will broaden the basis for economic growth in the EU."
Customer bookings later in the first quarter may be hit as recent, larger-than-usual,
forward buying seen may have been in "anticipation of steel producers looking to
recoup the rising cost of hot metal," Eurofer said. "The key uncertainty currently
stems from increased volatility in demand due to the continued tightness and rising
prices for raw materials," Moffat said. (Platts)
Base Metal
NALCO hikes aluminium prices by INR 6000 per tonne
NALCO said that it has increased the price of the metal by nearly 5% or INR 6,000
in sync with the firming up of the global prices. The price of aluminium at LME
crossed the USD 2,500 per tonne mark recently. This includes a USD 100 per tonne
rise in the last 3 to 4 days on a slightly tight global demand-supply scenario. Mr
Bagra said that "The global production of aluminium currently stands at 39 to 40MT
per annum. The demand is also around the same level. Meanwhile, some smelters
have been closed in China in the recent past. This led to a firming up of the price.”
He, however, added that the current small demand supply mismatch is only a
temporary phenomenon as with the firming up of the price, closed smelters have
again started resuming. Mr Bagra said that "As a result, I don't see price escalating
further in the immediate future. It would rather consolidate at the current level in the
short-term.” (PTI)
Other news
India Minister Estimates Coal Shortfall at 142 Million Tons
India’s domestic coal production will fall short of demand by 142MT in the year
starting April 1, exceeding a previous estimate. Coal demand in the next financial
year is expected to be 696 million metric tons compared with domestic output of 554
million tons, Coal Minister Sriprakash Jaiswal told reporters. The shortfall in the
2010-2011 annual plan was estimated at 83.33MT, according to the document posted
on the ministry’s website. Environmental restrictions and delayed approvals may
curb CIL’s production. Coal India’s output in the year ending March 31 may be
435MT, less than the target of 460.5MT, N.C. Jha, director in charge of policy
decisions on technical matters said. (Bloomberg)
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
As Aluminum financing trade becomes less economic,
the build up in exchange inventories will continue
• Backwardation in aluminum causing problems, as financing trade not as
profitable: JPM Global metals analyst Michael Jansen believes that
aluminum financing is becoming a tougher trade to justify and that the
‘magnitude of the material being rolled is just too much for the market to
handle’ ranging between 4-9MT of metal being rolled forward in a calendar
year. Michael believes that over 2011 if time spreads were to remain under
pressure, more and more material would come into LME warehouses (Lead
and Ally have seen sharp increases in LME inventories recently) and this
could probably lead to a ‘downshift in the aluminum prices to reflect the
unmasking of stock held outside the system’. Under such a scenario, Michael
believes that Ally could easily retreat towards the $1900-2100/MT area to
intersect with the upper quartile of the cash cost curve. (Please refer to Base
and Precious Metals Daily, dated Feb, 1, 2011, for more details). For Lead he
believes that from here the lead LME inventory build up would reflect supplydemand
balance as ‘off exchange Western World stocks are lean’. In his view,
given that Chinese lead exports are not competitive given the 15% export tax,
LME lead inventories have limited upside from here.
• Proposed Nippon-Sumitomo merger: Steel mergers seem to have returned
with Nippon and Sumitomo proposing a merger in 2012. JPM Japan Steel
analyst Akira Kishimoto highlights that the proposed merger would strengthen
the steelmakers’ negotiations with customers. JPM Australia steel analyst Ben
Wilson finds it ambitious that consolidation among Japanese steel producers
could have a meaningful impact on the Asian steel supplier structure given
capacity differential between Japan and China. Over the last 12 months as raw
material prices have been shorter duration and moved towards index linked,
steel margins have not held up. In terms of impact in India, we would
highlight that while Nippon is setting up a JV with TATA for auto grade steel,
Sumitomo has been in talks to purchase a stake in an Indian steel company.
• Price check: Steel prices have been broadly stable, though the metals press
(MB, SBB) has carried reports of steel companies looking to re-start some
idled BF. Spot iron ore prices remained stable, though thermal coal price
correction continues. No real trades are taking place in ferrous scrap as of now
• Coking coal- After the floods, comes the cyclone; Upcoming settlement
discussion- As important as the price would be the duration of the
contract: The metals press (MB, SBB) has reported that post cyclone the ports
are coming back to life. While we still have not heard of any material spot
coking coal transaction taking place and hence there is no real validation of the
$400/MT talked about price, we would highlight that spot Chinese coke and
met coal prices are up only 15-20%. We believe, in the upcoming April
contract negotiations, it would be important to see if the miners further reduce
the duration from 3 month to 1 month and/or get an index linked price setting
for coking coal (similar to iron ore).
Metal News Tracker
Steel
Steel companies hike prices in Feb
Steel companies like SAIL and JSW Steel hiked steel prices by Rs2000-2500/MT
effective 1st Feb. Prices were hiked for both long and flat steel products over the last
week. Rising prices of coking coal is continuing to put pressure on steelmakers to
increase prices of their products to maintain margins. Coking coal prices have surged
in the international market since supplies have been disrupted due to floods in
Queensland, Australia, which is one of the largest suppliers of the commodity.
(Business Line and Money Life)
European steel sector starts 2011 well on manufacturing: Eurofer
Regional steel industry group Eurofer said it views trends in European manufacturing
for steel demand as positive while low inventories are helping the sector make a
positive start to 2011. "Stocks at end-users and distributors are still assessed as low to
normal for the current level of downstream activity. The outlook for real and
apparent consumption is for further sustainable growth," Brussels-based Eurofer said
in a statement. Eurofer forecasts real and apparent steel consumption to rise by
around 4% a year in 2011 and 2012. "Indicators signal a continuation of this trend.
Improving capacity utilization will trigger investment in machinery and equipment.
Also construction investment looks set to stop acting as a drag on domestic demand
growth this year. This will broaden the basis for economic growth in the EU."
Customer bookings later in the first quarter may be hit as recent, larger-than-usual,
forward buying seen may have been in "anticipation of steel producers looking to
recoup the rising cost of hot metal," Eurofer said. "The key uncertainty currently
stems from increased volatility in demand due to the continued tightness and rising
prices for raw materials," Moffat said. (Platts)
Base Metal
NALCO hikes aluminium prices by INR 6000 per tonne
NALCO said that it has increased the price of the metal by nearly 5% or INR 6,000
in sync with the firming up of the global prices. The price of aluminium at LME
crossed the USD 2,500 per tonne mark recently. This includes a USD 100 per tonne
rise in the last 3 to 4 days on a slightly tight global demand-supply scenario. Mr
Bagra said that "The global production of aluminium currently stands at 39 to 40MT
per annum. The demand is also around the same level. Meanwhile, some smelters
have been closed in China in the recent past. This led to a firming up of the price.”
He, however, added that the current small demand supply mismatch is only a
temporary phenomenon as with the firming up of the price, closed smelters have
again started resuming. Mr Bagra said that "As a result, I don't see price escalating
further in the immediate future. It would rather consolidate at the current level in the
short-term.” (PTI)
Other news
India Minister Estimates Coal Shortfall at 142 Million Tons
India’s domestic coal production will fall short of demand by 142MT in the year
starting April 1, exceeding a previous estimate. Coal demand in the next financial
year is expected to be 696 million metric tons compared with domestic output of 554
million tons, Coal Minister Sriprakash Jaiswal told reporters. The shortfall in the
2010-2011 annual plan was estimated at 83.33MT, according to the document posted
on the ministry’s website. Environmental restrictions and delayed approvals may
curb CIL’s production. Coal India’s output in the year ending March 31 may be
435MT, less than the target of 460.5MT, N.C. Jha, director in charge of policy
decisions on technical matters said. (Bloomberg)
No comments:
Post a Comment