Steel prices remain stable; iron ore gains further: Emkay

Emkay Global Financial Services has come out with its report on metals sector. The research firm believes, lower than expected Chinese GDP would be a concern for the metals. Sell off in precious metals also would be a concern for industrial metals.

Steel prices remained stable during the last fortnight (ending 15th April) across all geographies, while iron ore prices saw further strengthening mainly due to hope for better demand from China. With the tepid global demand outlook for steel, believe, prices should remain under pressure. Base metals prices eased towards the end of the fortnight weighed by sharp decline in gold, silver and crude prices despite slight softening of USD index. With the weak sentiment and poor economic data, believe base metals prices also to remain weak…

Ferrous: steel prices remain stable; iron ore gains further

Steel prices remained stable during the fortnight in different markets. The CIS Black Sea (fob) export HRC prices as well as Chinese domestic prices remained intact at USD 565/ tonne and USD 617/tonne respectively. In India some players have been trying to increase prices however, lackluster demand continues to weigh

Iron ore prices saw further gains during last fortnight with 62 percent and 58 percent Fe grade prices gaining 3 percent each to USD 141/ tonne USD 131/ tonne respectively Non-ferrous: prices fell towards the end

The sharp decline in commodities – oil, gold and silver pressurized the LME prices towards the end of the fortnight. Zinc and Lead lost 3 percent and 5 percent respectively during the last fortnight to finish at USD 1814/ tonne and USD 1983/ tonne. Aluminium fell to its 3-1/2 year low of USD 1804/tonne and copper to 1-/12 year low of USD 7121/ tonne

On the inventory front, copper inventory rose 7 percent, aluminium inventory remained stable and zinc and lead inventory fell by 4 percent and 1 percent respectively during the fortnight

Macroeconomics: Chinese GDP data raises concern
Economic data released during the last fortnight across the globe showed continued sign of weakness. ISM Manufacturing PMI in US, Euro Zone PMI fell for the month of March. Chinese manufacturing PMI though improved on MoM basis, Chinese industrial production and GDP (7.7 percent) came weaker. While Eurozone data was satisfactory, Industrial production in UK fell during February. In India, while WPI came in lower, the IIP data witnessed significant drop. In the US FOMC meeting, FED policy makers showed concerns about possible risks to the stability of financial system. There was also concern raised on elevated jobless claims even though the economic data being released was better than expected. Believe, lower than expected Chinese GDP would be a concern for the metals. Sell off in precious metals also would be a concern for industrial metals.

Trend: Ferrous metals
Steel prices remained stable over the past fortnight. While the China HR Sheet price declined marginally by 0.3 percent to USD 617/tonne, the benchmark CIS Black Sea (fob) Export prices remained intact at USD 565/tonne. Some of the Indian steel producers though are trying to raise prices, believe lackluster demand has been restricting them to realize the same.

Iron ore prices during the last fortnight saw some further strengthening as the 62 percent Fe grade ore and 58 percent grade iron ore rose 3 percent each to USD 141/ tonne and USD 131/tonne respectively. The China domestic coking coal prices meanwhile declined further by 2.4 percent to close at USD 240/tonne.

In its April 2013 release of Short Range Outlook (SRO) for 2013 and 2014, World Steel Association (WSA) cut the global apparent steel usage (ASU) growth forecast for 2013 from 3.2 percent (in October 2012 release) to 2.9 percent. While the global economy was plagued by Eurozone crisis, hard landing of Chinese economy and US fiscal cliff issue in first half of 2013, the same have considerably eased and WSA expects recovery in second half of 2013 and in 2014. WSA also predicts ASU growth for India to be 5.9 percent which we believe would be capped within 5 percent considering the uncertainty in domestic demand outlook.

Trend: Non-ferrous metals
Like the previous fortnight, base metal prices maintained weak trend and fell further during the current fortnight. Copper aluminium, zinc and lead declined 6 percent, 4 percent, 3 percent and 5 percent respectively to close at USD 7121/tonne, USD 1804/tonne, USD 1814/tonne and USD 1983/tonne. Aluminium prices currently are at a 3-1/2 years low while copper is at 1-1/2 years low. The fall in the last fortnight came towards the end however due to sharp sell off in gold, silver and crude prices and despite slight improvement in USD index. Inventory trend was mixed. Aluminium inventory remained stable at 5.2 mt, while copper inventory rose again by 7 percent to 0.61 mt. Zinc and lead inventories fell by 4 percent and 1 percent respectively to 1.3 mt and 0.26 mt during the past fortnight.

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