Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Macquarie Survey Tools
Steel and Cement markets look tough
Event
The results of our Chinese Steel and Cement surveys for October reveal
that markets look challenging as we head into November and December.
Sentiment in the steel sector has definitely turned negative and this has been
reflected somewhat in the iron ore price this week, which has fallen to
US$120/t. Cement markets remain a little mixed but the key message is that
demand looks uncertain in the medium-term. We did hold a conference call
with Anhui Conch this week (largest Chinese Cement company) and it did
provide a little more confidence as to the health of the market.
Iron ore prices fall aggressively while steel prices in China appear to be
stabilising. The key focus now for investors remains the level of production
for steel as we head into the back of FY11. The most recent data out of CISA
suggests production has fallen to an annualised rate of 657mtpa down from
the highs of 737mtpa seen in June. If this sort of production slow down
continues, it could put further pressure on iron ore prices but it would be
supportive for steel prices as supply into the market falls.
Impact
The fall in iron ore prices has been rapid. We feel prices have crashed
through cost support of US$130-135/t but given steel production is also down,
the cost support could move towards US$100-110/t. The small uptick in steel
prices means steel company margins on a spot basis have seen an increase.
Key stock picks
Iron ore – Rio Tinto, FMG, AGO and Mitsui
Coking Coal – Fushan, Aston Resources, White Heaven Coal and Mitsubishi
Steel – Hyundai Steel, POSCO, Jindal Steel & Power and Maanshan
Cement – CR Cement
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Macquarie Survey Tools
Steel and Cement markets look tough
Event
The results of our Chinese Steel and Cement surveys for October reveal
that markets look challenging as we head into November and December.
Sentiment in the steel sector has definitely turned negative and this has been
reflected somewhat in the iron ore price this week, which has fallen to
US$120/t. Cement markets remain a little mixed but the key message is that
demand looks uncertain in the medium-term. We did hold a conference call
with Anhui Conch this week (largest Chinese Cement company) and it did
provide a little more confidence as to the health of the market.
Iron ore prices fall aggressively while steel prices in China appear to be
stabilising. The key focus now for investors remains the level of production
for steel as we head into the back of FY11. The most recent data out of CISA
suggests production has fallen to an annualised rate of 657mtpa down from
the highs of 737mtpa seen in June. If this sort of production slow down
continues, it could put further pressure on iron ore prices but it would be
supportive for steel prices as supply into the market falls.
Impact
The fall in iron ore prices has been rapid. We feel prices have crashed
through cost support of US$130-135/t but given steel production is also down,
the cost support could move towards US$100-110/t. The small uptick in steel
prices means steel company margins on a spot basis have seen an increase.
Key stock picks
Iron ore – Rio Tinto, FMG, AGO and Mitsui
Coking Coal – Fushan, Aston Resources, White Heaven Coal and Mitsubishi
Steel – Hyundai Steel, POSCO, Jindal Steel & Power and Maanshan
Cement – CR Cement
No comments:
Post a Comment