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India Equity Research Reports, IPO and Stock News
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Look through the headline numbers
and zinc shines
Feature article
The International Lead Zinc Study Group’s latest data continue to show world
markets for both metals in surplus this year to-date. We continue to think the
zinc market is better balanced than these data suggest and, from a fundamental
perspective, presently offers investors better value than its sister metal lead.
In zinc, data suggest strong demand growth and a fall in unreported stocks in
China, while physical market price signals remain solid. Meanwhile, in lead,
metal demand in its major market, China, has been undermined by disruptions
to lead-acid battery makers, while the role of high silver prices incentivising
rising mine output is often overlooked.
Latest news
LME base metals prices were mixed in trading on Wednesday. Nickel, lead
and copper all made modest gains, while aluminium, tin and zinc saw small
falls. In contrast, all precious metals prices fell. Gold lost some of its recent
lustre with a retreat of almost 6% on the day, and silver slipped by 1.9%.
Platinum remained above $1,850/t.oz, despite a fall of 1.1%.
US durable goods orders increased by 4% in July, driven by rising demand for
autos and aircraft, following a fall of 1.3% in June, which was less than first
estimated (-2.1%). This was the strongest rise in four months and well ahead
of consensus forecasts.
China’s galvanised sheet steel output climbed 19% YoY to 30.2mt annualised in
July. This was the strongest YoY gain registered since November 2010 and
the third-highest monthly total on record in what is usually a seasonally soft
month for galvanised steel production. YTD output is now 13% above the
level in the corresponding period in 2010, and already exceeds total output
in 2008. China is now the world’s largest producer of galvanised sheet steel,
overtaking Europe in Q2 2011, and production of galvanised steel is the main
market for zinc.
Tata Power Chairman Ratan Tata has said that he expects the government in
India to review the tariff structure for Ultra-Mega Power Projects (UMPPs)
given the rise in coal prices. The economics of some projects have become
questionable for those projects without coal linkages. Indian demand for
imported coal has been strong this year to-date, although largely due to a rise
in Indonesian low-CV coal at the expense of coal from South Africa. While we
expect Indian coal demand to remain steady, we also highlight that Indian
demand is price sensitive and that power prices are weak at present.
Kazakhstan's central bank is planning to use a "priority right" from the
government to purchase domestic gold bullion supplies. The central bank has
also suggested a withdrawal of value-added tax incentives that encourage
exports to spur more domestic refining capacity. Kazakhstan produced 26.9t
of gold in 2010.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Look through the headline numbers
and zinc shines
Feature article
The International Lead Zinc Study Group’s latest data continue to show world
markets for both metals in surplus this year to-date. We continue to think the
zinc market is better balanced than these data suggest and, from a fundamental
perspective, presently offers investors better value than its sister metal lead.
In zinc, data suggest strong demand growth and a fall in unreported stocks in
China, while physical market price signals remain solid. Meanwhile, in lead,
metal demand in its major market, China, has been undermined by disruptions
to lead-acid battery makers, while the role of high silver prices incentivising
rising mine output is often overlooked.
Latest news
LME base metals prices were mixed in trading on Wednesday. Nickel, lead
and copper all made modest gains, while aluminium, tin and zinc saw small
falls. In contrast, all precious metals prices fell. Gold lost some of its recent
lustre with a retreat of almost 6% on the day, and silver slipped by 1.9%.
Platinum remained above $1,850/t.oz, despite a fall of 1.1%.
US durable goods orders increased by 4% in July, driven by rising demand for
autos and aircraft, following a fall of 1.3% in June, which was less than first
estimated (-2.1%). This was the strongest rise in four months and well ahead
of consensus forecasts.
China’s galvanised sheet steel output climbed 19% YoY to 30.2mt annualised in
July. This was the strongest YoY gain registered since November 2010 and
the third-highest monthly total on record in what is usually a seasonally soft
month for galvanised steel production. YTD output is now 13% above the
level in the corresponding period in 2010, and already exceeds total output
in 2008. China is now the world’s largest producer of galvanised sheet steel,
overtaking Europe in Q2 2011, and production of galvanised steel is the main
market for zinc.
Tata Power Chairman Ratan Tata has said that he expects the government in
India to review the tariff structure for Ultra-Mega Power Projects (UMPPs)
given the rise in coal prices. The economics of some projects have become
questionable for those projects without coal linkages. Indian demand for
imported coal has been strong this year to-date, although largely due to a rise
in Indonesian low-CV coal at the expense of coal from South Africa. While we
expect Indian coal demand to remain steady, we also highlight that Indian
demand is price sensitive and that power prices are weak at present.
Kazakhstan's central bank is planning to use a "priority right" from the
government to purchase domestic gold bullion supplies. The central bank has
also suggested a withdrawal of value-added tax incentives that encourage
exports to spur more domestic refining capacity. Kazakhstan produced 26.9t
of gold in 2010.
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