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India Equity Research Reports, IPO and Stock News
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China coal prices: Looking to winter
strength
Feature article
Chinese coal prices look set to be more subdued for the rest of summer now
that hydro generation has picked up and coal stocks remain healthy. Winter,
however, looks like it will be very challenging for IPPs, with coal prices risks
firmly to the upside.
Latest news
Base metals were lower through the week, as rising Italian bond yields
heightened fears of contagion of debt problems through Europe, dominating
the positives of solid Chinese economic data.
US Industrial production rose 0.2% MoM in June, while manufacturing was flat
on the month and 3.7% higher YoY. The NY Fed survey of manufacturing was
in negative territory for the second month, although this failed to provide a
directional guide to the ISM last month.
Chinese steel prices ticked up again this week, as the market decided that
the governments plans for capacity closures was more important
than further property purchasing restrictions in some second and third-tier
cities. HRC prices rose RMB 10/t to RMB 4765/t ($629/t ex-VAT), while
rebar was up RMB 25/t to RMB 4885/t ($645/t). HRC prices are now at
the largest discount to rebar year to date.
Another week, another delay for an Australian iron ore project with Citic
Pacific the latest to be hit. The 24mtpa project was expected to start
commissioning this month with first concentrate shipment by the end of the
year – now commissioning will start at the end of this year with shipments
starting in H1 2012. Furthermore, the company is guiding for additional capex
of $900m on top of the $5.2bn already spent, taking total capital intensity
above the $250/t annual capacity mark (despite the infrastructure spend being
low). This again highlights the difficulties in bringing new iron ore projects to
market, and we would reiterate that we see seaborne supply continuing to
disappoint in the coming years.
Meanwhile, Fortescue reported quarterly iron ore shipments of 11.5mt
(46mtpa), up 35% QoQ but still well below the 55mt target for 2011 despite a
pick-up in recent weeks. Q3 guidance is for 12-12.5mt due to major
scheduled maintenance and the tie-in of the mine expansion process. The
cost pressures in Pilbara mining were again highlighted by the unit cash
costs increasing 18% to US$53/t (March quarter: US$45.0/t). In A$ terms, the
unit cost increase was 13% to A$50/t, driven primarily by a ~30% increase in
strip ratio.
Latest trade data shows that the US exported more than 2.4m tonnes of
ferrous scrap in May, the highest monthly total so far this year. Overall, in the
first five months of this year the US exported more than 9.1mt of ferrous
scrap, a 26.6% increase over the 7.2mt it exported during the same period in
2010.
Iron ore stockpiles in Chinese ports fell 471kt over the last week to 84.99mt,
reflecting further drawdowns as international supply continues to disappoint
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
China coal prices: Looking to winter
strength
Feature article
Chinese coal prices look set to be more subdued for the rest of summer now
that hydro generation has picked up and coal stocks remain healthy. Winter,
however, looks like it will be very challenging for IPPs, with coal prices risks
firmly to the upside.
Latest news
Base metals were lower through the week, as rising Italian bond yields
heightened fears of contagion of debt problems through Europe, dominating
the positives of solid Chinese economic data.
US Industrial production rose 0.2% MoM in June, while manufacturing was flat
on the month and 3.7% higher YoY. The NY Fed survey of manufacturing was
in negative territory for the second month, although this failed to provide a
directional guide to the ISM last month.
Chinese steel prices ticked up again this week, as the market decided that
the governments plans for capacity closures was more important
than further property purchasing restrictions in some second and third-tier
cities. HRC prices rose RMB 10/t to RMB 4765/t ($629/t ex-VAT), while
rebar was up RMB 25/t to RMB 4885/t ($645/t). HRC prices are now at
the largest discount to rebar year to date.
Another week, another delay for an Australian iron ore project with Citic
Pacific the latest to be hit. The 24mtpa project was expected to start
commissioning this month with first concentrate shipment by the end of the
year – now commissioning will start at the end of this year with shipments
starting in H1 2012. Furthermore, the company is guiding for additional capex
of $900m on top of the $5.2bn already spent, taking total capital intensity
above the $250/t annual capacity mark (despite the infrastructure spend being
low). This again highlights the difficulties in bringing new iron ore projects to
market, and we would reiterate that we see seaborne supply continuing to
disappoint in the coming years.
Meanwhile, Fortescue reported quarterly iron ore shipments of 11.5mt
(46mtpa), up 35% QoQ but still well below the 55mt target for 2011 despite a
pick-up in recent weeks. Q3 guidance is for 12-12.5mt due to major
scheduled maintenance and the tie-in of the mine expansion process. The
cost pressures in Pilbara mining were again highlighted by the unit cash
costs increasing 18% to US$53/t (March quarter: US$45.0/t). In A$ terms, the
unit cost increase was 13% to A$50/t, driven primarily by a ~30% increase in
strip ratio.
Latest trade data shows that the US exported more than 2.4m tonnes of
ferrous scrap in May, the highest monthly total so far this year. Overall, in the
first five months of this year the US exported more than 9.1mt of ferrous
scrap, a 26.6% increase over the 7.2mt it exported during the same period in
2010.
Iron ore stockpiles in Chinese ports fell 471kt over the last week to 84.99mt,
reflecting further drawdowns as international supply continues to disappoint
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