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Commodities Comment
Solid steel demand growth in 2011
Feature article
For steel, 2010 was the year when the ex-China demand rebound pushed
production rates to a new record high of over 1.4 billion tonnes. While 2011
may prove much less spectacular, in our view it will still exhibit an above trend
YoY growth of 6.3%, taking crude steel demand past 1.5 billion tonnes. While
slowing rates of Chinese demand growth and inflationary concerns in the
emerging markets will prevent a repeat of double digit YoY rises, this situation
is more than enough to keep the steel raw material markets tight. However,
as is typical in the steel sector, the path to growth will not be smooth, and we
expect to see a production pullback into mid-year as the demand cycle turns.
Latest news
Base metals shifted down in Wednesday LME trading, following the earlier
trend on the SHFE, as further concerns over Chinese tightening after
yesterday’s interest rate rise suppressed sentiment. Copper fell 1.4% to
$4.51/lb, while lead was down 2.7% as LME stocks continued their recent
ascent. In contrast, all precious metals rose on the day with palladium now at
$835/oz – the highest level for a decade.
LME and Comex copper stocks rose by 5,066t on Wednesday, largely
reflecting deliveries into Busan, Korea, from Chinese bonded warehouses
owing to the Chinese export copper price being well above the SHFE price.
Teck reported copper mine output forecasts for 2011 in its 4Q release on
Wednesday. As a result of the guidance we cut almost 30,000t of copper
contained from our 2011 supply forecast, with Carmen de Andacollo (-15kt),
Duck Pond (-5kt), Highland Valley (-8kt).
The Democratic Republic of Congo Mines Minister Martin Kabwelulu said on
Tuesday that it is considering phasing out a ban on mining in three eastern
provinces (North Kivu, South Kivu, and Maniema) that was aimed at halting
illegal trade from “mafia groups”. “Mines could be reopened quickly,”
Kabwelulu said. The DRC produced 14,000t of tin in concentrates in 2008,
13,6000t in 2009 and ~13,000t in 2010, which equates to 4-5% of global tin in
concentrate supply.
McCloskey has reported that Indian Cement producer Binani Cement has
been tempted back into the seaborne market by low prices, looking to secure
50kt of steam coal for March delivery. The last spot deal into India from
Richards Bay was also from a cement producer Ultratech, with prices netting
back to ~$120/t. The most recent Platts assessment of Prompt delivery
benchmark prices are $127.45/t/$129.15/t CIF West/East Coast of India,
which equates to ~$115/t from Richards Bay.
Rio Tinto has approved capex to extend the life of the Marandoo iron ore mine
in the Pilbara to 2030 (from 2014). When combined with the 15mtpa Hope
Downs 4 expansion, the company has now committed to ~$2.5bn of
sustaining capital spend over the past six months in order to maintain capacity
at the nameplate 225mtpa rate without net addition to the seaborne market.
This reiterates our view that potential ore degradation and mine replenishment
will be a critical theme in the iron ore sector in the coming years.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Commodities Comment
Solid steel demand growth in 2011
Feature article
For steel, 2010 was the year when the ex-China demand rebound pushed
production rates to a new record high of over 1.4 billion tonnes. While 2011
may prove much less spectacular, in our view it will still exhibit an above trend
YoY growth of 6.3%, taking crude steel demand past 1.5 billion tonnes. While
slowing rates of Chinese demand growth and inflationary concerns in the
emerging markets will prevent a repeat of double digit YoY rises, this situation
is more than enough to keep the steel raw material markets tight. However,
as is typical in the steel sector, the path to growth will not be smooth, and we
expect to see a production pullback into mid-year as the demand cycle turns.
Latest news
Base metals shifted down in Wednesday LME trading, following the earlier
trend on the SHFE, as further concerns over Chinese tightening after
yesterday’s interest rate rise suppressed sentiment. Copper fell 1.4% to
$4.51/lb, while lead was down 2.7% as LME stocks continued their recent
ascent. In contrast, all precious metals rose on the day with palladium now at
$835/oz – the highest level for a decade.
LME and Comex copper stocks rose by 5,066t on Wednesday, largely
reflecting deliveries into Busan, Korea, from Chinese bonded warehouses
owing to the Chinese export copper price being well above the SHFE price.
Teck reported copper mine output forecasts for 2011 in its 4Q release on
Wednesday. As a result of the guidance we cut almost 30,000t of copper
contained from our 2011 supply forecast, with Carmen de Andacollo (-15kt),
Duck Pond (-5kt), Highland Valley (-8kt).
The Democratic Republic of Congo Mines Minister Martin Kabwelulu said on
Tuesday that it is considering phasing out a ban on mining in three eastern
provinces (North Kivu, South Kivu, and Maniema) that was aimed at halting
illegal trade from “mafia groups”. “Mines could be reopened quickly,”
Kabwelulu said. The DRC produced 14,000t of tin in concentrates in 2008,
13,6000t in 2009 and ~13,000t in 2010, which equates to 4-5% of global tin in
concentrate supply.
McCloskey has reported that Indian Cement producer Binani Cement has
been tempted back into the seaborne market by low prices, looking to secure
50kt of steam coal for March delivery. The last spot deal into India from
Richards Bay was also from a cement producer Ultratech, with prices netting
back to ~$120/t. The most recent Platts assessment of Prompt delivery
benchmark prices are $127.45/t/$129.15/t CIF West/East Coast of India,
which equates to ~$115/t from Richards Bay.
Rio Tinto has approved capex to extend the life of the Marandoo iron ore mine
in the Pilbara to 2030 (from 2014). When combined with the 15mtpa Hope
Downs 4 expansion, the company has now committed to ~$2.5bn of
sustaining capital spend over the past six months in order to maintain capacity
at the nameplate 225mtpa rate without net addition to the seaborne market.
This reiterates our view that potential ore degradation and mine replenishment
will be a critical theme in the iron ore sector in the coming years.
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