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India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Central banks building bullion
reserves
Feature article
We review the role of central banks’ participation in the gold market in light of
the recent large purchase of 100t of gold by the Central Bank of Mexico in
February/March. Further accumulation of gold by central banks seems likely,
although it is worth considering the changing motivations for accumulating
foreign exchange reserves.
Latest news
It was a turbulent day across all financial markets, with commodities falling
sharply over the course of Thursday trading. Weaker economic data in the US
and weakness in the Euro following the ECB policy announcement saw
weakness in metals. Bulk commodities were only a touch weaker through the
day, although longer-dated steam coal futures were dragged down by the
energy complex.
Steel Business Briefing has reported that Northern China’s Shanxi province
will cut 4.7m tonnes/year of its coke capacity, according to the Shanxi
provincial government. The reductions are part of Beijing’s policy to eliminate
outdated production facilities, with the central government stating coke ovens
with chambers less than 4.3 meters high and tamping facilities under 3.8 m
high must close. According to official figures Shanxi has already cut 40mtpa of
coke capacity; however, the 85mt of production in 2010 remains well below
the stated 120mtpa capacity. This degree of underutilisation has allowed
Chinese domestic coke prices to all but ignore the recent surge in
international coking coal prices. Current coke price levels in China are around
RMB1,965/t (~$260/t ex-VAT).
The latest steel market survey by The Steel Index has seen the number of US
companies expecting lower prices in the coming three months rise 18% WoW
to 76%, the highest this year. However, 38% of respondents still expect
increased demand levels in the same period, while only 14% expect lower offtake.
In our view, US HRC prices have been too detached on the high side
from other regions in recent times, and further falls (at a lower rate) are
expected to continue closing the arbitrage.
Data from PWCS has shown that steam coal exports were 6.858t in April, up
strongly from the relatively weak 5.256t of steam coal exported in March.
Semi-soft shipments have not been particularly strong in the last few months,
with their share of total coal exports largely unchanged relative to 2010 at
13% despite the substantial rise in prices. These data do not include data
from the NCIG, which we understand is exporting ~15mt annualised at
present.
The China coal times has reported that officials are expected to cancel
planned resource taxation reform this year on inflation concerns. New
proposed regulations were reportedly only marginally increasing the tax
burden on coal, lifting charges from RMB0.3–5/t to RMB0.3–8/t.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Central banks building bullion
reserves
Feature article
We review the role of central banks’ participation in the gold market in light of
the recent large purchase of 100t of gold by the Central Bank of Mexico in
February/March. Further accumulation of gold by central banks seems likely,
although it is worth considering the changing motivations for accumulating
foreign exchange reserves.
Latest news
It was a turbulent day across all financial markets, with commodities falling
sharply over the course of Thursday trading. Weaker economic data in the US
and weakness in the Euro following the ECB policy announcement saw
weakness in metals. Bulk commodities were only a touch weaker through the
day, although longer-dated steam coal futures were dragged down by the
energy complex.
Steel Business Briefing has reported that Northern China’s Shanxi province
will cut 4.7m tonnes/year of its coke capacity, according to the Shanxi
provincial government. The reductions are part of Beijing’s policy to eliminate
outdated production facilities, with the central government stating coke ovens
with chambers less than 4.3 meters high and tamping facilities under 3.8 m
high must close. According to official figures Shanxi has already cut 40mtpa of
coke capacity; however, the 85mt of production in 2010 remains well below
the stated 120mtpa capacity. This degree of underutilisation has allowed
Chinese domestic coke prices to all but ignore the recent surge in
international coking coal prices. Current coke price levels in China are around
RMB1,965/t (~$260/t ex-VAT).
The latest steel market survey by The Steel Index has seen the number of US
companies expecting lower prices in the coming three months rise 18% WoW
to 76%, the highest this year. However, 38% of respondents still expect
increased demand levels in the same period, while only 14% expect lower offtake.
In our view, US HRC prices have been too detached on the high side
from other regions in recent times, and further falls (at a lower rate) are
expected to continue closing the arbitrage.
Data from PWCS has shown that steam coal exports were 6.858t in April, up
strongly from the relatively weak 5.256t of steam coal exported in March.
Semi-soft shipments have not been particularly strong in the last few months,
with their share of total coal exports largely unchanged relative to 2010 at
13% despite the substantial rise in prices. These data do not include data
from the NCIG, which we understand is exporting ~15mt annualised at
present.
The China coal times has reported that officials are expected to cancel
planned resource taxation reform this year on inflation concerns. New
proposed regulations were reportedly only marginally increasing the tax
burden on coal, lifting charges from RMB0.3–5/t to RMB0.3–8/t.
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