Metal: Sentiment continues to remain weak, Emkay

Emkay Global Financial Services has come out with its report on metal sector. According to the research firm price fall continued in ferrous and non- ferrous metals during the last fortnight ending June 1.

Price fall continued in both ferrous and non- ferrous metals during the last fortnight ending June 1, as global economic scenario remains uncertain, aided primarily by Europe and China and also due to strong upward movement in USD against major basket of currencies. Iron ore prices found some grounds however towards end of the last week. Indian players continue to be benefited on weakness in INR despite lackluster demand situation…

Ferrous: price fall continues

• Steel prices globally continued to soften on the back of demand woes and higher capacity utilizations. The CIS Black Sea (fob) export prices drifted down further to US$593/ tonne. North America and European domestic HR coil prices also fell 3% each during the last fortnight to US$645/ tonne and €521/ tonne respectively
• Iron ore prices also remain weak. While 63% Fe grade ore dipped 6% during past fortnight, fall in 62% Fe and 58% Fe grade ore was moderate at 0.1% and 1.8% respectively. This was as prices of lower grades improved from their lows during last week
• As per the World Steel Association, global capacity utilizations sustained at 81%, with ~2 mt/ day run rate recorded in China for the Month of April. With worries on the demand side, higher utilization rate is likely to keep the prices under check in the near to medium term

Non-ferrous: on a slippery way; aluminium at 2 year closing low

• Base metals prices fell to their multi- month low levels with copper slipped to US$7364/tonne, down 4% over last fortnight and lowest since mid- December’11
• Despite cost push, aluminium prices continue to decline raising concerns for most of the global producers. The metal during last fortnight shaded 3% more to US$1937/ tonne, lowest in past two years. The marginal cost for 50% global producers stands at ~US$2050/ tonne
• Zinc prices at US$1853/ tonne, down 3% over past fortnight stood at 5- month low, while lead saw a bigger fall of 5% during the same period and settled at US$1881/ tonne, lowest in last 7 months

Macroeconomics: slow down fears looming large

Most data released during the last fortnight describe the concerns on the global economic health. GDP for Jan- March quarter for US, UK and India came lower than expectations at 1.9%, -0.3% and 5.3% respectively. Manufacturing activities also stood lower with US manufacturing and Chicago PMI, Euro zone manufacturing PMI saw steeper fall than that was expected. China’s official PMI also fell to its weakest reading this year. All of these have been pointing towards a situation that could be worse than the expectations. USD index meanwhile, made a high of 83.5 during past fortnight.

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