Global Financial Services' research report on metals sector
Metals prices remained weak across the world on China worries. In steel, the CIS Export (FOB Black Sea) HRC prices decreased this time by 4.1% MoM and came in at US$347.5/ tonne. Cheaper exports from China are keeping global prices at the lower levels. In India, oversupply coupled with poor demand led to decrease in domestic steel prices by about 6-8% during the past three months. Iron ore (62% Fe grade) prices meanwhile, slipped 10% MoM to close at US$53.4/ tonne. Premium hard coking coal prices also fell after seeing some recovery last month and lost ~6% to close at US$85/ tonne. We expect steel prices to remain weak in absence of real demand, we should see gradual stabilization. Base metals prices, continued the last month’s falling trend weighed down by 1.9% increase in USD Index. Copper has been the weakest performer with 8.8% cut, followed by lead with a 3.8% fall, zinc with 3.7% decline and aluminium with 3.2% cut. LME inventory rose 24.3% for lead, followed by 6.6% gain in copper. However, fall in inventory was seen in zinc (by 6.4%) and aluminum (by 4.1%). China will continue to play the most important role in terms of price volatility.
Ferrous: CIS HRC Export prices fell below US$350/ tonne- The CIS HRC (FoB Black Sea) prices fell steeply 4.1% MoM to US$ 347.5/ tonne while China HRC prices fell 6.3% MoM to US$ 339.1/ tonne, Domestic steel prices also continued to fall further due to poor demand and higher supply mainly from cheap imports- The 62% Fe grade ore price fell sharply 10% MoM to US$53.4/ tonne, while 58% Fe grade ore prices decreased 7.9% to US$48.9/ tonne. Premium hard coking coal (FoB East Coast) also, decreased by 6.2% to US$85.4/ tonne.
- Global crude steel production for June’15 stood at 135.6 mn tonnes (-2.4%% YoY; -2.7% MoM). Capacity utilization rose marginally to 72.2%. Overall daily production increased 0.6% MoM, due to 1.8% rise in China’s production to 2.3 mt; India’s daily steel production run rate however was flat MoM. Production fell in CIS region (-4.8%) and Japan (-0.7%), while rise in production was reported in US and EU (28) by 1.6% and 0.2% respectively on per day MoM basis.
Non-ferrous: fall continues
- Bases metals prices continue to fall but at a slower rate during the month. Copper prices fell most by 8.8% to US$5220/ tonne followed by lead, which declined by 3.8% to US$1688/ tonne. Zinc prices too contracted by 3.7% to US$1920/ tonne, while Aluminium prices fell by 3.2% to US$1594/ tonne.
- Inventory levels subsequently rose, sharp rise in lead by 24.9% and 6.6% in copper, while, exceptions being zinc and aluminium which fell by 6.4% and 4.1% respectively.
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