Metals and Mining Conference- Pre-conference note :: Emkay

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Metals and Mining Conference

Pre-conference note

Metals and Mining industry has been going through an interesting phase since past three years. After enjoying strong performance and higher valuations during 2006-07 the industry saw one of the toughest periods during 2008-09 in terms of falling demand, rising costs etc. Unlike the earlier times, the response of the industry to combat the situation in past two years was quicker and appropriate too, as most of the players cut productions, introduced costs saving measures, started balance sheet restructuring. This helped the industry to restrict the damage it could have witnessed otherwise.

The focus of the industry also gradually shifted to the emerging markets, as developed markets continued to suffer from low growth and high deficits. On the other hand, emerging markets led by China and India staged a speedy recovery which helped the Metals and Mining industry among others to perform better. When, most of the developed countries are still facing with low demand and thus lower capacity utilizations, both China and India have actually managed to post higher metals production on YoY basis. The World Steel Association has also predicted India’s steel demand to grow by ~13% during next couple of years. Backed by robust potential, we have seen interests of many global steel giants like ArcelorMittal and POSCO to set up steel plants in India. Also, many technological collaborations have been signed between Indian and foreign players recently indicating a strong growth phase going ahead.

On one side, the industry in India has been going through some challenges related to environmental issues, illegal mining, stiff regulations, higher input costs etc., however the coordinated approach, strong demand and scouting for raw material security even in abroad should maintain a healthy growth for the industry. 

On the pricing front, steel prices started firming up recently on cost push on the back of higher iron ore and coking coal prices and higher demand and we believe prices to remain strong in the near- medium term. Margin pressure however can not be ruled out because of higher coking coal costs. Base metals prices on the other side has seen sharp rise led by copper on recovery hopes in developed markets and investment demand.

Corporates

n     JSW Steel

n     Hindustan Zinc

n     Hindalco

n     Godawari Power and Ispat

n     Sarda Energy & Minerals

n     Essel Mining

Industry Expert

n     KPMG

n     Federation of Indian Minerals Industries (FIMI)