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India Equity Research Reports, IPO and Stock News
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Noise on credit problems impacting iron ore traders in China continues:
Media reports (SBB) continue to highlight the credit issues faced by Chinese
iron ore traders in sourcing Letters of Credit to import iron ore. High grade iron
ore prices have fallen to $175/MT as the physical market was lacklustre. From
here while markets would wait the return of the physical buyers, we believe the
ramp up of the Goan iron ore supply from India also needs to be focused upon
to see the supply impact.
Reducing order cycles, postponing of purchases: Our recent conversations
with India’s steel pipe makers who mainly cater to the export market highlight
two important trends: a) shortening of the order cycle with longer duration
orders now not being favored by the buyers given increasing volatility; and b)
postponing of orders by procurement managers in order to catch the low point of
the steel cycle.
Export steel prices out of CIS decline by $20/MT: Given falling raw material
prices, CIS export prices for HRC have fallen by $20/MT to $695/MT, in line
with Chinese HRC export prices. For Indian mills, the recent INR depreciation,
combined with the large discount that domestic prices have had with imported
prices, in our view, means that any near-term falls in domestic HRC prices are
unlikely. We believe domestic steel supply has not recovered since May, when
the gas issue surfaced first (impacting Western India mills) and hence even
though demand is soft we believe prices could likely edge up higher rather than
going down.
Steel scrap prices remain weak: In line with steel prices and demand, steel
scrap prices remain weak with HMS prices down $20/MT to $440/MT a
month back.
Coal – China’s black gold: JPM China mining analyst Daniel Kang in a
detailed report (China's black gold - fear provides opportunity, dated 9th Oct,
2011) highlights China’s coal demand to grow at 5-6%pa (currently >10%) to
2015, driven by further (albeit slower) growth in coal-fired power capacity
and continued urbanization underpinning demand from steel and cement.
Daniel highlights that ‘Mine consolidation and improved mechanization
should ultimately improve supply, but we believe China's recent shift into a
sizeable net coal importer is both permanent and set to grow further. Given
the growing significance of energy security within the region, particularly
following Japan’s Fukushima nuclear accident’, Daniel expects‘ regional coal
markets to remain tight over coming years, supporting elevated coal price
levels’.
Alumina prices continue to fall: The MB index alumina prices have
fallen to $355/MT, down from a peak of $418 earlier in the year. Chinese
alumina imports have reduced sharply over the last few months
(increased bauxite imports) and on current LME aluminum prices,
alumina is at 16% of LME aluminum. Spot alumina is down 15% from
the recent peak vs. 14% for aluminum. The shift to index pricing model
has so far not insulated alumina from price correction
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Noise on credit problems impacting iron ore traders in China continues:
Media reports (SBB) continue to highlight the credit issues faced by Chinese
iron ore traders in sourcing Letters of Credit to import iron ore. High grade iron
ore prices have fallen to $175/MT as the physical market was lacklustre. From
here while markets would wait the return of the physical buyers, we believe the
ramp up of the Goan iron ore supply from India also needs to be focused upon
to see the supply impact.
Reducing order cycles, postponing of purchases: Our recent conversations
with India’s steel pipe makers who mainly cater to the export market highlight
two important trends: a) shortening of the order cycle with longer duration
orders now not being favored by the buyers given increasing volatility; and b)
postponing of orders by procurement managers in order to catch the low point of
the steel cycle.
Export steel prices out of CIS decline by $20/MT: Given falling raw material
prices, CIS export prices for HRC have fallen by $20/MT to $695/MT, in line
with Chinese HRC export prices. For Indian mills, the recent INR depreciation,
combined with the large discount that domestic prices have had with imported
prices, in our view, means that any near-term falls in domestic HRC prices are
unlikely. We believe domestic steel supply has not recovered since May, when
the gas issue surfaced first (impacting Western India mills) and hence even
though demand is soft we believe prices could likely edge up higher rather than
going down.
Steel scrap prices remain weak: In line with steel prices and demand, steel
scrap prices remain weak with HMS prices down $20/MT to $440/MT a
month back.
Coal – China’s black gold: JPM China mining analyst Daniel Kang in a
detailed report (China's black gold - fear provides opportunity, dated 9th Oct,
2011) highlights China’s coal demand to grow at 5-6%pa (currently >10%) to
2015, driven by further (albeit slower) growth in coal-fired power capacity
and continued urbanization underpinning demand from steel and cement.
Daniel highlights that ‘Mine consolidation and improved mechanization
should ultimately improve supply, but we believe China's recent shift into a
sizeable net coal importer is both permanent and set to grow further. Given
the growing significance of energy security within the region, particularly
following Japan’s Fukushima nuclear accident’, Daniel expects‘ regional coal
markets to remain tight over coming years, supporting elevated coal price
levels’.
Alumina prices continue to fall: The MB index alumina prices have
fallen to $355/MT, down from a peak of $418 earlier in the year. Chinese
alumina imports have reduced sharply over the last few months
(increased bauxite imports) and on current LME aluminum prices,
alumina is at 16% of LME aluminum. Spot alumina is down 15% from
the recent peak vs. 14% for aluminum. The shift to index pricing model
has so far not insulated alumina from price correction
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