Emkay Global Financial Services has come out with its report on metal space.
During the last fortnight (ending July 17), metals prices remained mostly flat despite 2% rise in US Dollar index. We believe, this might be an indication of stability in metal prices in the short-term. Also, as most of the base metals prices are lower than the CoP, any positive news flow can boost prices upward. Steel prices should however remain stable on low demand, higher capacity and falling raw material prices…
Ferrous: Prices remain stable, raw material prices soften
- The last fortnight saw some stability in ferrous prices as the CIS Black Sea (fob) HRC export prices remained almost flat at US$545/ tonne. While European prices (€513/ tonne) did not change much, North American domestic HR coil prices rose 2%. Indian long product prices continued weakness, as old scrap prices fell to Rs 30,000/ tonne
- Iron ore prices fell broadly during the fortnight. 63% Fe grade ore lost 3% to close at US$137.3/tonne, while 62% Fe grade ore lost 4.4% to end at US$129.4/tonne. 58% Fe grade ore declined moderately by 1.2% to US$119.5/tonne
- With higher than expected production from Rio Tinto and BHP coupled with slowdown fear in China, pressure on RM prices likely to continue. Eurofer meanwhile reiterated its concerns on the European steel industry in foreseeable future
Non-ferrous: Marginal drop seen despite 2% rise in US Dollar index
- The prices of all the base metals dropped ~1% over previous fortnight, however some improvement was seen towards the end
- LME for copper, aluminium, zinc and lead settled at US$7671/ tonne, US$1889/ tonne, US$1886/ tonne and US$1889/ tonne respectively during last fortnight
- We believe, there is a sign of stability and we won’t be surprised if there is a shortterm rise in prices of base metals in near future
Macroeconomics: broadly weak as expected- Though June PMI for Eurozone rose marginally to 46.4, China PMI dipped to 3-month low of 50.6 and UK PMI slipped to 8-month low of 51.3. US non-farm payroll saw a lower than expected increase of 80,000. Industrial production for UK, Eurozone, US and India at 1%, 0.6%, 0.4% and 2.4% respectively came in as a positive surprise. The WPI inflation data for India at 7.25% too boosted the sentiments to some extent. On the flip side again China’s 2Q GDP growth fell further to 7.6% from 8.1% (1Q) adding to the concerns on slow down fear in China. US Dollar index meanwhile 2% further over the last fortnight to 83.4.
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