Metal: Sentiment driven by China says Emkay

Emkay Global Financial Services has come out with its report on metal sector. The research firm believes that metals prices to remain relatively stable in the near term and would broadly depend on the Chinese economic recovery.

Steel prices remained broadly stable during the last fortnight (ending December 31). Iron ore prices however, continued to gain significantly, on hopes of a better demand from China, as weekly inventory at Chinese ports fell towards 71 mt. Prices of base metals meanwhile corrected marginally during the same time. Believe metals prices to remain relatively stable in the near term and would broadly depend on the Chinese economic recovery. In India, higher inventory situation would continue to restrict domestic steel prices from any substantial improvement…

Trend- Ferrous metals: Global steel prices continued to gain during the last fortnight. While the China HR Sheet price gained 1.1% to US$631/tonne, Europe HRC prices increased ~4% to US$ 628/tonne. The benchmark CIS Black Sea (fob) Export prices however remained unchanged at US$532.5/tonne. In India too, despite talks of a prices hike by some of the players, believe major producers are focusing on inventory liquidation rather than raising the prices, as demand situation still remains weak. On a QoQ basis the domestic steel prices were down by Rs 1000- 1500/ tonne, thus even a hike of Rs 1000/ tonne (as per media), will take the prices back to Q2FY13 level. On the raw material side, the gain was more significant, with 62% and 58% grades of iron ore gaining 12% and 15% to US$144.9/tonne and US$134.6/tonne respectively. The China domestic coking coal prices rose 2% to close at US$272/tonne.

Trend- Non-ferrous metals: Reversing the previous fortnight’s positive trend, all base metal prices on LME (except lead) lost 1-4% over the last fortnight. While lead gained 2% to end at US$2340/tonne, Aluminium, copper and zinc lost 4%, 2% and 1% to end at US$2040/tonne, US$7915/tonne and US$2035/tonne respectively. Copper LME inventory rose sharply by 17% during the fortnight to 0.32 mt, aluminium inventory remained stable at 5.2 mt., zinc inventory fell 1% to 1.22 mt. and lead inventory fell 8% to 0.32 mt.

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