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India Equity Research Reports, IPO and Stock News
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• CIS HRC export price declines to $660/MT: As per the trade press (MB,
SBB, Bloomberg), Ukrainian HRC export prices saw a sharp decline this
week to $660/MT after falling to $700/MT earlier this week. This implies
imported HRC price of Rs33.5k/MT, 6% lower than current domestic
prices. We see Indian mills needing to cut prices/give discounts, given the
sharp decline. JPM Europe steel analyst Alessandro Abate highlights that
further price declines in the European steel market is possible and current
China and ex-China steel price differential seems unsustainable. China’s
March steel exports jumped sharply m/m (gross steel exports at 4.9MT
were the highest since June-10).
• Essar commissioned 3.5MT CSP, JSW to increase capacity soon- Indian
flat product over capacity to increase from here: Essar has commissioned
3.5MT compact strip mill taking flat steel production capacity to 10MT,
though liquid steel production capacity is still below that as 2 of furnaces are
yet to be commissioned. JSW intends to soon announce commissioning of its
new 3.2MT capacity. TATA Steel adds ~3MT in Sept-Dec.
• Iron ore, coking coal revised up, can spot steel price decline continue
given the expected raw material trajectory?:JPM iron and coal team have
revised up their forecasts with iron ore expected to average $170/$160MT for
2011/12E (earlier $145 for each year) and coking coal to $276/MT from
$250/MT earlier. Spot iron ore remains elevated at $190/MT. In this context, it
is difficult to see HRC prices go back to their 2010 lows of $550/MT.
• Base Metals price revision mainly on mark to market, but near term
downside risks: JPM Global metals analyst Michael Jansen has revised base
metals forecast but sees near term downside risks. Michael highlights the
noted deceleration in apparent consumption of main industrial commodities
(aluminum, zinc, iron ore and steel) given the tighter credit environment.
Michael highlights the gold silver ratio is at a multi decade low of 35x (silver
is the 2nd best performing commodity in 2011 after cotton) and fund flow in
silver remains 'extremely robust'. 2 key points on fundamentals, Michael
highlights are, strong demand from China with net trade in silver
evolving from a net export of 40moz on annual running basis to a net
import of 120moz in the year to Feb-11, and that silver secondary refining
has been slower to expand as refiners focused on gold scrap.
• Key highlights from Glencore offer documents: The offer document from
Glencore highlights the following as its share of the ‘addressable market’-zinc
metal-60%; zinc concentrate-50%;copper metal 50%; copper concentrate-
30%; alumina-38%; aluminum-22%; thermal coal-28% and met coal-16%.
• As per JPM metals analyst Fraser Jamieson, Alcoa confirmed that currently
20% of 3rd party shipments of alumina are now being priced on spot/index
basis and all contracts rolling off are being transitioned to spot/index pricing.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
• CIS HRC export price declines to $660/MT: As per the trade press (MB,
SBB, Bloomberg), Ukrainian HRC export prices saw a sharp decline this
week to $660/MT after falling to $700/MT earlier this week. This implies
imported HRC price of Rs33.5k/MT, 6% lower than current domestic
prices. We see Indian mills needing to cut prices/give discounts, given the
sharp decline. JPM Europe steel analyst Alessandro Abate highlights that
further price declines in the European steel market is possible and current
China and ex-China steel price differential seems unsustainable. China’s
March steel exports jumped sharply m/m (gross steel exports at 4.9MT
were the highest since June-10).
• Essar commissioned 3.5MT CSP, JSW to increase capacity soon- Indian
flat product over capacity to increase from here: Essar has commissioned
3.5MT compact strip mill taking flat steel production capacity to 10MT,
though liquid steel production capacity is still below that as 2 of furnaces are
yet to be commissioned. JSW intends to soon announce commissioning of its
new 3.2MT capacity. TATA Steel adds ~3MT in Sept-Dec.
• Iron ore, coking coal revised up, can spot steel price decline continue
given the expected raw material trajectory?:JPM iron and coal team have
revised up their forecasts with iron ore expected to average $170/$160MT for
2011/12E (earlier $145 for each year) and coking coal to $276/MT from
$250/MT earlier. Spot iron ore remains elevated at $190/MT. In this context, it
is difficult to see HRC prices go back to their 2010 lows of $550/MT.
• Base Metals price revision mainly on mark to market, but near term
downside risks: JPM Global metals analyst Michael Jansen has revised base
metals forecast but sees near term downside risks. Michael highlights the
noted deceleration in apparent consumption of main industrial commodities
(aluminum, zinc, iron ore and steel) given the tighter credit environment.
Michael highlights the gold silver ratio is at a multi decade low of 35x (silver
is the 2nd best performing commodity in 2011 after cotton) and fund flow in
silver remains 'extremely robust'. 2 key points on fundamentals, Michael
highlights are, strong demand from China with net trade in silver
evolving from a net export of 40moz on annual running basis to a net
import of 120moz in the year to Feb-11, and that silver secondary refining
has been slower to expand as refiners focused on gold scrap.
• Key highlights from Glencore offer documents: The offer document from
Glencore highlights the following as its share of the ‘addressable market’-zinc
metal-60%; zinc concentrate-50%;copper metal 50%; copper concentrate-
30%; alumina-38%; aluminum-22%; thermal coal-28% and met coal-16%.
• As per JPM metals analyst Fraser Jamieson, Alcoa confirmed that currently
20% of 3rd party shipments of alumina are now being priced on spot/index
basis and all contracts rolling off are being transitioned to spot/index pricing.
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