Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
• Iron ore de-stocking continues, spot iron ore moves down as inventories
move up, still no increase in exports from South India: Spot iron ore prices
declined further to $178/MT. YTD low (for 63.5% CFR) is $171/MT in
March, while in July-10 spot iron ore hit $130/MT. Port inventories in
China increased ~10% w/w to 93MT, the highest level YTD. The metals
press (MB, SBB) has carried reports of steel production being impacted given
the power situation, though so far no material cuts have taken place.
• Mining Equities- Short term aggressive correction possible: JPM UK
mining analyst David Butler in his note (UK Mining-Short Term Cautious,
dated 3rd June, 2011), highlights concern about an aggressive short term
correction in mining equities driven by a) all round softer economic data; b)
more moderating manufacturing growth in China; c) broader macro
considerations given expiry of QE2. David advises using the potential
volatility to add to key OW positions given a) medium to long term remain
bullish on the impact of China’s ongoing urbanization (particularly Western
China); b) Supply trends particularly over next 2-3 years look compelling for
iron ore and copper.
• Near term silver lining for aluminum, thermal coal: In the same report,
David highlights that the power shortages are positive for aluminum, and also
for thermal coal demand, while he sees China’s copper de-stocking phase
coming to an end. On aluminum, both Indian producers, Hindalco and
NALCO reported cost escalation across alumina and aluminum given carbon
and energy cost increases.
• Select steel price increases in India not surprising, but demand remains a
problem across the materials complex in India: Given the imported steel
price increase, Indian steel mills have increased HRC prices by 3%. However,
our concern remains the extremely weak demand situation across the
materials complex in India. Cement sales reported by the big 4 imply 0.9%
y/y growth in May and the average growth since Nov is 4%. Steel demand has
been equally anemic, Hindalco in its analyst meet highlighted that aluminum
consumption growth rate in H2FY11 stood at only 8% compared to 20% in
H1, while copper consumption declined by 11% in H2FY11 compared to 5%
growth in H1FY11. The demand problem across the basic materials
complex has been compounded by bunching up of capacity addition
(cement, steel and aluminum). The seasonal lull period starts from July with
the onset of the rainy season.
• Indian coal- High powered meetings next week: Media reports (HT)
indicates the Prime Minister's meeting on coal with various ministries is
scheduled for June 7th, while the Ministry of Coal meeting to review the New
Coal Distribution Policy (NCDP) is scheduled for June 8th. JPM utilities
analyst Shilpa Krishnan has highlighted that incremental coal demand from
the power sector is 62MT, while COAL can supply 41MT only.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
• Iron ore de-stocking continues, spot iron ore moves down as inventories
move up, still no increase in exports from South India: Spot iron ore prices
declined further to $178/MT. YTD low (for 63.5% CFR) is $171/MT in
March, while in July-10 spot iron ore hit $130/MT. Port inventories in
China increased ~10% w/w to 93MT, the highest level YTD. The metals
press (MB, SBB) has carried reports of steel production being impacted given
the power situation, though so far no material cuts have taken place.
• Mining Equities- Short term aggressive correction possible: JPM UK
mining analyst David Butler in his note (UK Mining-Short Term Cautious,
dated 3rd June, 2011), highlights concern about an aggressive short term
correction in mining equities driven by a) all round softer economic data; b)
more moderating manufacturing growth in China; c) broader macro
considerations given expiry of QE2. David advises using the potential
volatility to add to key OW positions given a) medium to long term remain
bullish on the impact of China’s ongoing urbanization (particularly Western
China); b) Supply trends particularly over next 2-3 years look compelling for
iron ore and copper.
• Near term silver lining for aluminum, thermal coal: In the same report,
David highlights that the power shortages are positive for aluminum, and also
for thermal coal demand, while he sees China’s copper de-stocking phase
coming to an end. On aluminum, both Indian producers, Hindalco and
NALCO reported cost escalation across alumina and aluminum given carbon
and energy cost increases.
• Select steel price increases in India not surprising, but demand remains a
problem across the materials complex in India: Given the imported steel
price increase, Indian steel mills have increased HRC prices by 3%. However,
our concern remains the extremely weak demand situation across the
materials complex in India. Cement sales reported by the big 4 imply 0.9%
y/y growth in May and the average growth since Nov is 4%. Steel demand has
been equally anemic, Hindalco in its analyst meet highlighted that aluminum
consumption growth rate in H2FY11 stood at only 8% compared to 20% in
H1, while copper consumption declined by 11% in H2FY11 compared to 5%
growth in H1FY11. The demand problem across the basic materials
complex has been compounded by bunching up of capacity addition
(cement, steel and aluminum). The seasonal lull period starts from July with
the onset of the rainy season.
• Indian coal- High powered meetings next week: Media reports (HT)
indicates the Prime Minister's meeting on coal with various ministries is
scheduled for June 7th, while the Ministry of Coal meeting to review the New
Coal Distribution Policy (NCDP) is scheduled for June 8th. JPM utilities
analyst Shilpa Krishnan has highlighted that incremental coal demand from
the power sector is 62MT, while COAL can supply 41MT only.
No comments:
Post a Comment