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Commodities: Macro update: JPM Global metals analyst Michael
Jansen in his Base Metals Daily highlights that the end of QE2 would
likely result in additional volatility in the commodities complex.
Michael highlights that – ‘We are still bullish H2 as a house but it has
to be said that the conviction around a Q3 IP and global economic
recovery is fading at the margin. With policy likely staying a touch
tighter in China than the sanguine market view it also points towards
additional near term headwinds for commodities. The tighter credit
conditions in China along with power restrictions are THE key reason
why we believe that Chinese firms and merchants will generally keep
operating inventory levels low this year and this bodes for ongoing
disappointments with respect to import tonnages’.
Coking coal- stroke to resume: As per Bloomberg, miners at BMA’s 7
coking coal mines would strike work for 12 hours. Media reports
(steelguru) have indicated more Indian mills accepting monthly coking
coal contracts from BHP, which is the dominant supplier to Indian steel
mills.
Steel, iron ore update: Spot steel prices have weakened in many
markets with sharpest correction seen in European HRC prices which are
now back to Jan levels. CIS export prices (HRC) have remained steady at
neat $700/ MT levels. We believe going forward as Indian steel capacity
increases particularly in flat steel, India’s export-import trade in flat steel
(particularly in commodity grade HRC) would change from a net
importer to a net exporter and could likely impact export price dynamics
out of India as mills compete with Chinese/CIS suppliers (India Steel:
Analyzing steel export-import data highlights no easy way out from
FLATS over capacity). China’s steel imports to India declined 14% in
May. Spot iron ore prices remain range bound in $175-180/MT band.
China’s May iron ore imports were broadly flat m/m at 53MT.
May global steel production update: Global steel production increased
2.9% m/m and 4.3% y/y. China steel production increased 7.1% y/y and
ex China global steel production increased more sedately at 1.7% y/y.
Interestingly UK, EU27, Africa+Middle East all reported a y/y decline in
May while North America, CIS and Asia Ex China and India all reported
broadly flat y/y steel production, clearly indicating that steel production
in many parts is slowing down. JPM European steel analyst Alessandro
Abate highlights ‘Likely global production cuts heading into Q3
(seasonally weakest quarter of the year) could add pressure on raw
material cost whilst supporting steel prices
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Commodities: Macro update: JPM Global metals analyst Michael
Jansen in his Base Metals Daily highlights that the end of QE2 would
likely result in additional volatility in the commodities complex.
Michael highlights that – ‘We are still bullish H2 as a house but it has
to be said that the conviction around a Q3 IP and global economic
recovery is fading at the margin. With policy likely staying a touch
tighter in China than the sanguine market view it also points towards
additional near term headwinds for commodities. The tighter credit
conditions in China along with power restrictions are THE key reason
why we believe that Chinese firms and merchants will generally keep
operating inventory levels low this year and this bodes for ongoing
disappointments with respect to import tonnages’.
Coking coal- stroke to resume: As per Bloomberg, miners at BMA’s 7
coking coal mines would strike work for 12 hours. Media reports
(steelguru) have indicated more Indian mills accepting monthly coking
coal contracts from BHP, which is the dominant supplier to Indian steel
mills.
Steel, iron ore update: Spot steel prices have weakened in many
markets with sharpest correction seen in European HRC prices which are
now back to Jan levels. CIS export prices (HRC) have remained steady at
neat $700/ MT levels. We believe going forward as Indian steel capacity
increases particularly in flat steel, India’s export-import trade in flat steel
(particularly in commodity grade HRC) would change from a net
importer to a net exporter and could likely impact export price dynamics
out of India as mills compete with Chinese/CIS suppliers (India Steel:
Analyzing steel export-import data highlights no easy way out from
FLATS over capacity). China’s steel imports to India declined 14% in
May. Spot iron ore prices remain range bound in $175-180/MT band.
China’s May iron ore imports were broadly flat m/m at 53MT.
May global steel production update: Global steel production increased
2.9% m/m and 4.3% y/y. China steel production increased 7.1% y/y and
ex China global steel production increased more sedately at 1.7% y/y.
Interestingly UK, EU27, Africa+Middle East all reported a y/y decline in
May while North America, CIS and Asia Ex China and India all reported
broadly flat y/y steel production, clearly indicating that steel production
in many parts is slowing down. JPM European steel analyst Alessandro
Abate highlights ‘Likely global production cuts heading into Q3
(seasonally weakest quarter of the year) could add pressure on raw
material cost whilst supporting steel prices
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