INSTITUTIONAL EQUITY RESEARCH Page | 1 | PHILLIPCAPITAL INDIA RESEARCH Please see penultimate page for additional important disclosures. PhillipCapital (India) Private Limited. (“PHILLIPCAP”) is a foreign broker‐dealer unregistered in the USA. PHILLIPCAP research is prepared by research analysts who are not registered in the USA. PHILLIPCAP research is distributed in the USA pursuant to Rule 15a‐6 of the Securities Exchange Act of 1934 solely by Rosenblatt Securities Inc, an SEC registered and FINRA‐member broker‐dealer. Metals Monthly wrap INDIA 28 August 2019 Key highlights • Global crude steel production growth moderated‐ July 2019 steel production jumped 1.7% yoy to c.157mn tonnes largely aided by higher production in China and India. However; average daily production fell 4.6% mom to 5.1mn tonnes. Chinese production accounted for 54.4% of global production, up 170bps yoy but down 70bps mom. • Steel prices falling: China, EU, India and CIS reported mom price fall of 5%, 2%, 5% and 3% respectively. Only US reported domestic price improvement of 3%. • Iron ore and coking coal in free fall: Iron‐ore fines (63.5 Fe China export) prices fell 26% mom to US$ 88/t as supplies easing and Chinese steel production moderating. Coking coal prices (Premium HCC FOB Australia) fell 12% mom at US$ 153/t (flat yoy). Chinese steel production and demand moderating; exports remained under check • Chinese crude steel production grew 5% yoy to 85.2mn tonnes. China’s average daily production fell sharply by 5.8% mom to 2.7mn tonne. Net steel exports at 4.7mn tonnes were down 3% yoy. • Chinese steel inventories increased 7% mom to 13.4mn tonnes. • Chinese HRC prices fell 5% mom on escalating trade war concern and slowing demand. • Current steel‐mills profitability at CNY 84/t is just above breakeven levels. • Iron ore imports improved 1%/21% yoy/qoq to 91mn tonnes. Current inventory improved marginally to ~37 days of production at July average daily production run rate. Indian steel prices are under pressure on slowing demand • Indian crude steel production for July grew 2% yoy to 9.2mn tonnes while consumption improved 3.5% yoy to 8.4mn tonnes. 4MFY20 steel consumption grew 5.7% to 33.3mn tonnes. • FY19 crude steel production and steel consumption grew 3.1% and 7.5% yoy, respectively. • Net steel imports stood at 311KT for July 2019 an increase from 305KT mom and 229KT yoy. Korea (31%), Japan (18%) and China (20%) together enjoy 69% of market share. • Current domestic HRC at Rs 37,000/tonne fell 5% mom. Non‐ferrous: Prices falling • Global aluminium production contracted 1.3% yoy to 5.4 mn tonnes, following 2.1% fall in Chinese production to 3.1mn tonnes. Global and China average daily production fell marginally (1%) mom basis. • Aluminium prices witnessed fall of 2% mom to US$ 1,744 The gap between LME and Shanghai prices stands at US$ 245/t, US$ 2 increase on mom basis. • Aluminium inventories on major fell 7% mom to 1.3mn tonnes. • China’s aluminium exports at 490KT fell 6%/3%% yoy/mom. • Chinese captive power smelter profitability improved CNY326/t mom to CNY 3,689/t. Chinese non‐integrated smelters profitability also improved by same amount to CNY 989/t. • Aluminium CoP also witnessed downward trend. Alumina, anode and caustic soda mom prices fell 2%, 4% and 11%, respectively. While thermal coal prices were flat. • Zinc prices fell sharply by 7% mom to US$ 2,258/t. Lead prices jumped 1% mom to US$ 2,083/t • Zinc TC/remained at elevated levels of US$ 275/t. • Zinc inventories fell mom while lead inventories improved. Indices (rebased) Absolute Performance Change 1M 3M 6M China HRC ‐4.9 ‐7.1 ‐15.7 Europe HRC ‐2.1 0.0 ‐17.9 US HRC 3.5 ‐3.2 ‐32.6 Black SEA ‐3.0 4.9 ‐13.1 India HRC ‐5.1 ‐7.4 ‐16.3 Iron ore ‐26.4 ‐20.6 30.1 Coking coal ‐12.1 ‐25.4 ‐16.4 Aluminium ‐1.9 ‐1.0 ‐16.5 Zinc ‐6.6 ‐16.1 ‐10.5 Copper ‐4.7 ‐4.6 ‐7.7 Lead 1.0 15.4 1.3 Alumina ‐2.2 ‐17.5 ‐46.6 Thermal coal ‐11.9 ‐21.8 ‐44.3 INR ‐4.3 ‐3.0 2.4 Source: Company, PhillipCapital India Research Vikash Singh, Research Analyst (+ 9122 6246 4128) [email protected]50 70 90 110 130 150 170 BSE Sensex BSE Metal Index
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INSTITUTIONAL EQUITY RESEARCH
Page | 1 | PHILLIPCAPITAL INDIA RESEARCH Please see penultimate page for additional important disclosures. PhillipCapital (India) Private Limited. (“PHILLIPCAP”) is a foreign broker‐dealer unregistered in the USA. PHILLIPCAP researchis prepared by research analysts who are not registered in the USA. PHILLIPCAP research is distributed in the USA pursuant to Rule 15a‐6 of the Securities Exchange Act of 1934 solely byRosenblatt Securities Inc, an SEC registered and FINRA‐member broker‐dealer.
Metals Monthly wrap INDIA
28 August 2019
Key highlights • Global crude steel production growth moderated‐ July 2019 steel production jumped
1.7% yoy to c.157mn tonnes largely aided by higher production in China and India. However; average daily production fell 4.6% mom to 5.1mn tonnes. Chinese production accounted for 54.4% of global production, up 170bps yoy but down 70bps mom.
• Steel prices falling: China, EU, India and CIS reported mom price fall of 5%, 2%, 5% and 3% respectively. Only US reported domestic price improvement of 3%.
• Iron ore and coking coal in free fall: Iron‐ore fines (63.5 Fe China export) prices fell 26% mom to US$ 88/t as supplies easing and Chinese steel production moderating. Coking coal prices (Premium HCC FOB Australia) fell 12% mom at US$ 153/t (flat yoy).
Chinese steel production and demand moderating; exports remained under check • Chinese crude steel production grew 5% yoy to 85.2mn tonnes. China’s average daily production fell sharply by 5.8% mom to 2.7mn tonne. Net steel exports at 4.7mn tonnes were down 3% yoy.
• Chinese steel inventories increased 7% mom to 13.4mn tonnes. • Chinese HRC prices fell 5% mom on escalating trade war concern and slowing demand. • Current steel‐mills profitability at CNY 84/t is just above breakeven levels. • Iron ore imports improved 1%/21% yoy/qoq to 91mn tonnes. Current inventory improved marginally to ~37 days of production at July average daily production run rate.
Indian steel prices are under pressure on slowing demand • Indian crude steel production for July grew 2% yoy to 9.2mn tonnes while consumption improved 3.5% yoy to 8.4mn tonnes. 4MFY20 steel consumption grew 5.7% to 33.3mn tonnes.
• FY19 crude steel production and steel consumption grew 3.1% and 7.5% yoy, respectively. • Net steel imports stood at 311KT for July 2019 an increase from 305KT mom and 229KT yoy. Korea (31%), Japan (18%) and China (20%) together enjoy 69% of market share.
• Current domestic HRC at Rs 37,000/tonne fell 5% mom. Non‐ferrous: Prices falling • Global aluminium production contracted 1.3% yoy to 5.4 mn tonnes, following 2.1% fall in Chinese production to 3.1mn tonnes. Global and China average daily production fell marginally (1%) mom basis.
• Aluminium prices witnessed fall of 2% mom to US$ 1,744 The gap between LME and Shanghai prices stands at US$ 245/t, US$ 2 increase on mom basis.
• Aluminium inventories on major fell 7% mom to 1.3mn tonnes. • China’s aluminium exports at 490KT fell 6%/3%% yoy/mom. • Chinese captive power smelter profitability improved CNY326/t mom to CNY 3,689/t. Chinese non‐integrated smelters profitability also improved by same amount to CNY 989/t.
• Aluminium CoP also witnessed downward trend. Alumina, anode and caustic soda mom prices fell 2%, 4% and 11%, respectively. While thermal coal prices were flat.
• Zinc prices fell sharply by 7% mom to US$ 2,258/t. Lead prices jumped 1% mom to US$ 2,083/t
• Zinc TC/remained at elevated levels of US$ 275/t. • Zinc inventories fell mom while lead inventories improved.
Note: The 64 countries included in this table accounted for ~99% of total world crude steel production in 2018. Source: World Steel Association Global crude steel production for July 2019 jumped 1.7% yoy to 157mn tonnes largely because of higher production in China and India. However; average daily production fell 4.6% mom to 5.1mn tonnes. Chinese production accounted for 54.4% of global production, up 170bps yoy but down 70bps mom. In the first four month of FY20 global crude steel production grew by 4.5% to 635mn tonnes largely on account of higher production in China (9.3% higher yoy), India (3.8% higher yoy), and United States (3.6% higher yoy).
Page | 3 | PHILLIPCAPITAL INDIA RESEARCH
METALS MONTHLY WRAP UP
Ferrous: Global Markit Eurozone Manufacturing PMI
July PMI fell 110bps mom to 46.5 (consecutive sixth month of contraction).
Europe steel production (mn tonne)
Euro zone July 2019 steel production at 13.6 mn tonnes were flat yoy.
Europe apparent steel consumption (mn tonnes)
EU apparent consumption fell 5.4% yoy.
Europe domestic HRC price ex‐works (USD/tonne)
Europe prices have fallen c2% on mom and 21% yoy.
Black Sea HRC Spot FoB (USD/tonne)
Black Sea HRC export prices fell 3%/13% mom/yoy.
Turkey scrap prices – (USD/tonne)
Scrap prices have also fell 3%/11% mom/yoy to US$ 372/t.
Source: Bloomberg
40
45
50
55
60
65
Sep‐16
Nov
‐16
Jan‐17
Mar‐17
May‐17
Jul‐1
7
Sep‐17
Nov
‐17
Jan‐18
Mar‐18
May‐18
Jul‐1
8
Sep‐18
Nov
‐18
Jan‐19
Mar‐19
May‐19
Jul‐1
9‐8%‐6%‐4%‐2%0%2%4%6%8%10%12%14%
10.0
11.0
12.0
13.0
14.0
15.0
16.0
Jul‐1
6
Oct‐16
Jan‐17
Apr‐17
Jul‐1
7
Oct‐17
Jan‐18
Apr‐18
Jul‐1
8
Oct‐18
Jan‐19
Apr‐19
Jul‐1
9
Mn tonn
es
Europe Steel Production YoY growth (RHS)
‐10%
‐5%
0%
5%
10%
15%
20%
‐
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
Jul‐1
6
Oct‐16
Jan‐17
Apr‐17
Jul‐1
7
Oct‐17
Jan‐18
Apr‐18
Jul‐1
8
Oct‐18
Jan‐19
Apr‐19
Jul‐1
9
Europe Apparent consumption YoY Growth
300
350
400
450
500
550
600
650
700
750
800
Dec‐16
Feb‐17
Apr‐17
Jun‐17
Aug‐17
Oct‐17
Dec‐17
Feb‐18
Apr‐18
Jun‐18
Aug‐18
Oct‐18
Dec‐18
Feb‐19
Apr‐19
Jun‐19
Aug‐19
US$/ton
ne
North Europe South Europe
300
350
400
450
500
550
600
650
Jun‐17
Aug‐17
Oct‐17
Dec‐17
Feb‐18
Apr‐18
Jun‐18
Aug‐18
Oct‐18
Dec‐18
Feb‐19
Apr‐19
Jun‐19
Aug‐19
US$/ton
ne
‐
50
100
150
200
250
300
350
400
450
May‐16
Jul‐1
6Sep‐16
Nov
‐16
Jan‐17
Mar‐17
May‐17
Jul‐1
7Sep‐17
Nov
‐17
Jan‐18
Mar‐18
May‐18
Jul‐1
8Sep‐18
Nov
‐18
Jan‐19
Mar‐19
May‐19
Jul‐1
9
Page | 4 | PHILLIPCAPITAL INDIA RESEARCH
METALS MONTHLY WRAP UP
Markit US Manufacturing PMI
US PMI fell 20bps mom to 50.4 (close to 50 which separates growth to contraction).
US steel capacity utilisation (%)
Steel capacity utilizations for July improved 40/250 bps mom/yoy to 80.9%.
US HRC price (USD/tonne)
US domestic HRC prices jumped 3% mom to US$ 600/t. However; yoy prices have fallen by 33%.
US apparent consumption (mn tonne)
US apparent steel consumption for July 2019 jumped 2% yoy.
Europe EAF steel profitability (USD/tonne)
Europe EAF steel mill profitability remained flat mom. Source: Bloomberg
40
42
44
46
48
50
52
54
56
58
Sep‐16
Nov
‐16
Jan‐17
Mar‐17
May‐17
Jul‐1
7
Sep‐17
Nov
‐17
Jan‐18
Mar‐18
May‐18
Jul‐1
8
Sep‐18
Nov
‐18
Jan‐19
Mar‐19
May‐19
Jul‐1
9 60
65
70
75
80
85
Jul‐1
6
Oct‐16
Jan‐17
Apr‐17
Jul‐1
7
Oct‐17
Jan‐18
Apr‐18
Jul‐1
8
Oct‐18
Jan‐19
Apr‐19
Jul‐1
9
300
400
500
600
700
800
900
1,000
Nov
‐16
Feb‐17
May‐17
Aug‐17
Nov
‐17
Feb‐18
May‐18
Aug‐18
Nov
‐18
Feb‐19
May‐19
Aug‐19
‐30%
‐25%
‐20%
‐15%
‐10%
‐5%
0%
5%
10%
15%
20%
‐
2.0
4.0
6.0
8.0
10.0
12.0
Jul‐1
4
Nov
‐14
Mar‐15
Jul‐1
5
Nov
‐15
Mar‐16
Jul‐1
6
Nov
‐16
Mar‐17
Jul‐1
7
Nov
‐17
Mar‐18
Jul‐1
8
Nov
‐18
Mar‐19
Jul‐1
9
Mn tonn
es
Consumption Growth yoy
‐
50
100
150
200
250
300
350
Aug‐16
Nov
‐16
Feb‐17
May‐17
Aug‐17
Nov
‐17
Feb‐18
May‐18
Aug‐18
Nov
‐18
Feb‐19
May‐19
Aug‐19
Page | 5 | PHILLIPCAPITAL INDIA RESEARCH
METALS MONTHLY WRAP UP
Ferrous: China
China crude steel production (mn tonnes)
Chinese crude steel production at 85.2 mn tonnes grew 5% yoy. Avg. daily production at 2.7mn tonnes fell 5.8% mom.
China net steel exports (mn tonnes)
Net steel exports at 4.7mn tonnes fell 3% yoy. 7MCY19 net steel export fell 1% yoy.
China Steel demand – (mn tonne)
China’s apparent steel demand growth has moderated in July.
Chine HRC prices – (US$/tonne)
Chinese domestic/export HRC prices fell 9%/5% yoy/mom.
Tangshan BF utilisation rate – (%)
Post sharp fall in July, blast furnace utilization started to increase again in August and currently stands at 78.5%.
China BoF Steel profitability (CNY/tonne)
Steel profitability improved of late and turned positive.
Source: Bloomberg
50
55
60
65
70
75
80
85
90
95
Jul‐1
6
Oct‐16
Jan‐17
Apr‐17
Jul‐1
7
Oct‐17
Jan‐18
Apr‐18
Jul‐1
8
Oct‐18
Jan‐19
Apr‐19
Jul‐1
9
Mn tonn
es
0
2
4
6
8
10
12
14
Jul‐1
6
Oct‐16
Jan‐17
Apr‐17
Jul‐1
7
Oct‐17
Jan‐18
Apr‐18
Jul‐1
8
Oct‐18
Jan‐19
Apr‐19
Jul‐1
9
Import Export Net of Export/(Import)
‐
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
Jul‐1
6
Oct‐16
Jan‐17
Apr‐17
Jul‐1
7
Oct‐17
Jan‐18
Apr‐18
Jul‐1
8
Oct‐18
Jan‐19
Apr‐19
Jul‐1
9
200
300
400
500
600
700
Aug‐16
Nov
‐16
Feb‐17
May‐17
Aug‐17
Nov
‐17
Feb‐18
May‐18
Aug‐18
Nov
‐18
Feb‐19
May‐19
Aug‐19
Domestic Export
50
55
60
65
70
75
80
85
90
95
Aug‐16
Oct‐16
Dec‐16
Feb‐17
Apr‐17
Jun‐17
Aug‐17
Oct‐17
Dec‐17
Feb‐18
Apr‐18
Jun‐18
Aug‐18
Oct‐18
Dec‐18
Feb‐19
Apr‐19
Jun‐19
Aug‐19
‐400
‐200
0
200
400
600
800
1,000
1,200
1,400
Aug‐16
Oct‐16
Dec‐16
Feb‐17
Apr‐17
Jun‐17
Aug‐17
Oct‐17
Dec‐17
Feb‐18
Apr‐18
Jun‐18
Aug‐18
Oct‐18
Dec‐18
Feb‐19
Apr‐19
Jun‐19
Aug‐19
CNY/tonn
e
Page | 6 | PHILLIPCAPITAL INDIA RESEARCH
METALS MONTHLY WRAP UP
China iron ore imports (mn tonne)
Iron‐ore imports at 91mn tonnes jumped 1%/21% yoy/mom.
Share of iron‐ore exporters in Chinese ore imports (%)
Share of Australian iron‐ore fell as Brazil exports started improving.
China iron‐ore weekly inventory (mn tonnes)
Iron ore inventories at 103mn tonnes jumped 4% mom but down 24% yoy.
Iron‐ore inventory to consumption days
Consumption day improved marginally mom to 37 days (calculated on daily steel production run rate).
China import – 63.5% Fe Iron ore, CIF (USD/tonne)
Iron ore price fell sharply by 26% mom to US$ 88/t. However; on yoy, it’s still 30% higher.
China import 65% Fe pellet, CFR – (USD/tonne)
Pellet prices are also down 16%/17% mom/yoy to US$ 121/t.
Source: Bloomberg
60
65
70
75
80
85
90
95
100
105
Oct‐16
Jan‐17
Apr‐17
Jul‐1
7
Oct‐17
Jan‐18
Apr‐18
Jul‐1
8
Oct‐18
Jan‐19
Apr‐19
Jul‐1
9
Mn tonn
es
0
10
20
30
40
50
60
70
80
Jul‐1
7
Oct‐17
Jan‐18
Apr‐18
Jul‐1
8
Oct‐18
Jan‐19
Apr‐19
Jul‐1
9
%
India Australia Brazil Other countries
50
70
90
110
130
150
170
Aug‐16
Nov
‐16
Feb‐17
May‐17
Aug‐17
Nov
‐17
Feb‐18
May‐18
Aug‐18
Nov
‐18
Feb‐19
May‐19
Aug‐19
Mn tonn
e
10
20
30
40
50
60
70
80
Apr‐18
May‐18
Jun‐18
Jul‐1
8
Aug‐18
Sep‐18
Oct‐18
Nov
‐18
Dec‐18
Jan‐19
Feb‐19
Mar‐19
Apr‐19
May‐19
Jun‐19
Jul‐1
9
Aug‐19
35
45
55
65
75
85
95
105
115
125
135
Aug‐16
Nov
‐16
Feb‐17
May‐17
Aug‐17
Nov
‐17
Feb‐18
May‐18
Aug‐18
Nov
‐18
Feb‐19
May‐19
Aug‐19
35
55
75
95
115
135
155
175
Aug‐16
Nov
‐16
Feb‐17
May‐17
Aug‐17
Nov
‐17
Feb‐18
May‐18
Aug‐18
Nov
‐18
Feb‐19
May‐19
Aug‐19
Page | 7 | PHILLIPCAPITAL INDIA RESEARCH
METALS MONTHLY WRAP UP
Spread between 63.5% and 58% Fe imported iron ore (USD/tonne)
Gap between high vs. low‐grade iron ore further narrowed to US$ 8/t.
China coke production (mn tonne)
China coke production improved 11% yoy to 40 mn tonnes. However, average daily production fell 8% mom.
Australia premium hard coking coal price – (USD / tonne)
Coking coal prices at US$ 153/t were down 12%/16% mom/yoy.
China domestic coke spot price (USD / tonne)
Coke prices at US$ 335/ improved marginally on mom basis.
Steelhome China inventory – (mn tonne)
Inventories jumped 7% mom to 13.4mn tonnes. Source: Bloomberg
0
5
10
15
20
25
30
35
Oct‐16
Dec‐16
Feb‐17
Apr‐17
Jun‐17
Aug‐17
Oct‐17
Dec‐17
Feb‐18
Apr‐18
Jun‐18
Aug‐18
Oct‐18
Dec‐18
Feb‐19
Apr‐19
Jun‐19
Aug‐19
25
27
29
31
33
35
37
39
41
43
Jul‐1
6
Oct‐16
Jan‐17
Apr‐17
Jul‐1
7
Oct‐17
Jan‐18
Apr‐18
Jul‐1
8
Oct‐18
Jan‐19
Apr‐19
Jul‐1
9
‐
50
100
150
200
250
300
350
Aug‐16
Nov
‐16
Feb‐17
May‐17
Aug‐17
Nov
‐17
Feb‐18
May‐18
Aug‐18
Nov
‐18
Feb‐19
May‐19
Aug‐19
‐
50
100
150
200
250
300
350
400
450
Aug‐16
Nov
‐16
Feb‐17
May‐17
Aug‐17
Nov
‐17
Feb‐18
May‐18
Aug‐18
Nov
‐18
Feb‐19
May‐19
Aug‐19
0
5
10
15
20
25
Jul‐1
6
Oct‐16
Jan‐17
Apr‐17
Jul‐1
7
Oct‐17
Jan‐18
Apr‐18
Jul‐1
8
Oct‐18
Jan‐19
Apr‐19
Jul‐1
9
Long Flat
Page | 8 | PHILLIPCAPITAL INDIA RESEARCH
METALS MONTHLY WRAP UP
Ferrous: India Crude steel production (mn tonnes)
Indian crude steel production for July improved 2% yoy to 9.2mn tonnes.
India steel consumption (mn tonne)
July steel demand grew at 3.5% yoy to 8.4mn tonnes. 4MFY20 consumption grew at 5.7% to 33.3 mn tonnes.
Net steel import/ (export) – mn tonnes
July net steel imports stood at 311KT vs 305KT mom and 229KT yoy.
County‐wise Steel import share
Chinese imports jumped sharply on mom basis.
Sponge iron price, Raipur – (Rs / tonne)
Sponge iron fell 1%/31% mom/yoy to Rs 18,100/t.
Pig iron price, Raipur – (Rs / tonne)
Pig iron prices fell 5%/20% mom/yoy to Rs 24,000/t.
Source: JPC, Steelmint
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
Jul‐1
6
Oct‐16
Jan‐17
Apr‐17
Jul‐1
7
Oct‐17
Jan‐18
Apr‐18
Jul‐1
8
Oct‐18
Jan‐19
Apr‐19
Jul‐1
94
5
6
7
8
9
10
Jul‐1
6Sep‐16
Nov
‐16
Jan‐17
Mar‐17
May‐17
Jul‐1
7Sep‐17
Nov
‐17
Jan‐18
Mar‐18
May‐18
Jul‐1
8Sep‐18
Nov
‐18
Jan‐19
Mar‐19
May‐19
Jul‐1
9
‐1.00
‐0.80
‐0.60
‐0.40
‐0.20
‐
0.20
0.40
Jul‐1
6
Oct‐16
Jan‐17
Apr‐17
Jul‐1
7
Oct‐17
Jan‐18
Apr‐18
Jul‐1
8
Oct‐18
Jan‐19
Apr‐19
Jul‐1
9
Mn tonn
es
35% 40%31%
15%
22%
18%
19%11%
20%
7% 2% 5%0% 5% 4%5%
4% 4%
19% 16% 18%
0%
20%
40%
60%
80%
100%
`July 18 `June 19 `July 19
Others
Germany
Ukraine
Indonesia
China
Japan
Korea
10000
12000
14000
16000
18000
20000
22000
24000
26000
28000
30000
Aug‐16
Nov
‐16
Feb‐17
May‐17
Aug‐17
Nov
‐17
Feb‐18
May‐18
Aug‐18
Nov
‐18
Feb‐19
May‐19
Aug‐19
15,000
17,000
19,000
21,000
23,000
25,000
27,000
29,000
31,000
33,000
35,000
Aug‐16
Nov
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Feb‐17
May‐17
Aug‐17
Nov
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May‐18
Aug‐18
Nov
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Feb‐19
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Aug‐19
Page | 9 | PHILLIPCAPITAL INDIA RESEARCH
METALS MONTHLY WRAP UP
Billet price, Raigarh (Rs / tonne)
Billet prices were flat mom but fell 28% yoy to Rs 25,800/t.
Wire Rod and HB wire price, Raipur (Rs / tonne)
Both HB wires and wire‐rod prices fell 4‐5% mom.
Domestic HRC price – Mumbai (Rs/tonne)
Domestic HRC (in warehouse) prices fell 5%/17% mom/yoy to Rs 37,000/t.
Domestic HRC premium/(discount) ‐ Rs/tonne
Domestic HRC prices are trading at a discount of c.Rs 2,044/t vs. imported Chinese steel.
NMDC Chattisgarh price (Rs/tonne)
NMDC cuts iron ore lump as well as fine prices by Rs 200/t to Rs 2,900/t and Rs 2,660/t in mid August.
Imported iron ore vs. NMDC parity (Rs/tonne)
NMDC iron ore is trading at c.37% discount to imported iron ore currently down from 45% mom.
Rating Methodology We rate stock on absolute return basis. Our target price for the stocks has an investment horizon of one year. Rating Criteria Definition
BUY >= +15% Target price is equal to or more than 15% of current market price
NEUTRAL ‐15% > to < +15% Target price is less than +15% but more than ‐15%
SELL <= ‐15% Target price is less than or equal to ‐15%.
Disclosures and Disclaimers PhillipCapital (India) Pvt. Ltd. has three independent equity research groups: Institutional Equities, Institutional Equity Derivatives, and Private Client Group. This report has been prepared by Institutional Equities Group. The views and opinions expressed in this document may, may not match, or may be contrary at times with the views, estimates, rating, and target price of the other equity research groups of PhillipCapital (India) Pvt. Ltd.
This report is issued by PhillipCapital (India) Pvt. Ltd., which is regulated by the SEBI. PhillipCapital (India) Pvt. Ltd. is a subsidiary of Phillip (Mauritius) Pvt. Ltd. References to "PCIPL" in this report shall mean PhillipCapital (India) Pvt. Ltd unless otherwise stated. This report is prepared and distributed by PCIPL for information purposes only, and neither the information contained herein, nor any opinion expressed should be construed or deemed to be construed as solicitation or as offering advice for the purposes of the purchase or sale of any security, investment, or derivatives. The information and opinions contained in the report were considered by PCIPL to be valid when published. The report also contains information provided to PCIPL by third parties. The source of such information will usually be disclosed in the report. Whilst PCIPL has taken all reasonable steps to ensure that this information is correct, PCIPL does not offer any warranty as to the accuracy or completeness of such information. Any person placing reliance on the report to undertake trading does so entirely at his or her own risk and PCIPL does not accept any liability as a result. Securities and Derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily an indication of future performance.
This report does not regard the specific investment objectives, financial situation, and the particular needs of any specific person who may receive this report. Investors must undertake independent analysis with their own legal, tax, and financial advisors and reach their own conclusions regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realised. Under no circumstances can it be used or considered as an offer to sell or as a solicitation of any offer to buy or sell the securities mentioned within it. The information contained in the research reports may have been taken from trade and statistical services and other sources, which PCIL believe is reliable. PhillipCapital (India) Pvt. Ltd. or any of its group/associate/affiliate companies do not guarantee that such information is accurate or complete and it should not be relied upon as such. Any opinions expressed reflect judgments at this date and are subject to change without notice.
Important: These disclosures and disclaimers must be read in conjunction with the research report of which it forms part. Receipt and use of the research report is subject to all aspects of these disclosures and disclaimers. Additional information about the issuers and securities discussed in this research report is available on request.
Certifications: The research analyst(s) who prepared this research report hereby certifies that the views expressed in this research report accurately reflect the research analyst’s personal views about all of the subject issuers and/or securities, that the analyst(s) have no known conflict of interest and no part of the research analyst’s compensation was, is, or will be, directly or indirectly, related to the specific views or recommendations contained in this research report.
Additional Disclosures of Interest: Unless specifically mentioned in Point No. 9 below: 1. The Research Analyst(s), PCIL, or its associates or relatives of the Research Analyst does not have any financial interest in the company(ies) covered in
this report. 2. The Research Analyst, PCIL or its associates or relatives of the Research Analyst affiliates collectively do not hold more than 1% of the securities of the
company (ies)covered in this report as of the end of the month immediately preceding the distribution of the research report. 3. The Research Analyst, his/her associate, his/her relative, and PCIL, do not have any other material conflict of interest at the time of publication of this
research report. 4. The Research Analyst, PCIL, and its associates have not received compensation for investment banking or merchant banking or brokerage services or for
any other products or services from the company(ies) covered in this report, in the past twelve months. 5. The Research Analyst, PCIL or its associates have not managed or co‐managed in the previous twelve months, a private or public offering of securities for
the company (ies) covered in this report. 6. PCIL or its associates have not received compensation or other benefits from the company(ies) covered in this report or from any third party, in
connection with the research report. 7. The Research Analyst has not served as an Officer, Director, or employee of the company (ies) covered in the Research report. 8. The Research Analyst and PCIL has not been engaged in market making activity for the company(ies) covered in the Research report. 9. Details of PCIL, Research Analyst and its associates pertaining to the companies covered in the Research report: Sr. no. Particulars Yes/No
1 Whether compensation has been received from the company(ies) covered in the Research report in the past 12 months for investment banking transaction by PCIL
No
2 Whether Research Analyst, PCIL or its associates or relatives of the Research Analyst affiliates collectively hold more than 1% of the company(ies) covered in the Research report
No
3 Whether compensation has been received by PCIL or its associates from the company(ies) covered in the Research report No4 PCIL or its affiliates have managed or co‐managed in the previous twelve months a private or public offering of securities for the
company(ies) covered in the Research report No
5 Research Analyst, his associate, PCIL or its associates have received compensation for investment banking or merchant banking or brokerage services or for any other products or services from the company(ies) covered in the Research report, in the last twelve months
No
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Independence: PhillipCapital (India) Pvt. Ltd. has not had an investment banking relationship with, and has not received any compensation for investment banking services from, the subject issuers in the past twelve (12) months, and PhillipCapital (India) Pvt. Ltd does not anticipate receiving or intend to seek compensation for investment banking services from the subject issuers in the next three (3) months. PhillipCapital (India) Pvt. Ltd is not a market maker in the securities mentioned in this research report, although it, or its affiliates/employees, may have positions in, purchase or sell, or be materially interested in any of the securities covered in the report.
Suitability and Risks: This research report is for informational purposes only and is not tailored to the specific investment objectives, financial situation or particular requirements of any individual recipient hereof. Certain securities may give rise to substantial risks and may not be suitable for certain investors. Each investor must make its own determination as to the appropriateness of any securities referred to in this research report based upon the legal, tax and accounting considerations applicable to such investor and its own investment objectives or strategy, its financial situation and its investing experience. The value of any security may be positively or adversely affected by changes in foreign exchange or interest rates, as well as by other financial, economic, or political factors. Past performance is not necessarily indicative of future performance or results.
Sources, Completeness and Accuracy: The material herein is based upon information obtained from sources that PCIPL and the research analyst believe to be reliable, but neither PCIPL nor the research analyst represents or guarantees that the information contained herein is accurate or complete and it should not be relied upon as such. Opinions expressed herein are current opinions as of the date appearing on this material, and are subject to change without notice. Furthermore, PCIPL is under no obligation to update or keep the information current. Without limiting any of the foregoing, in no event shall PCIL, any of its affiliates/employees or any third party involved in, or related to computing or compiling the information have any liability for any damages of any kind including but not limited to any direct or consequential loss or damage, however arising, from the use of this document.
Copyright: The copyright in this research report belongs exclusively to PCIPL. All rights are reserved. Any unauthorised use or disclosure is prohibited. No reprinting or reproduction, in whole or in part, is permitted without the PCIPL’s prior consent, except that a recipient may reprint it for internal circulation only and only if it is reprinted in its entirety.
Caution: Risk of loss in trading/investment can be substantial and even more than the amount / margin given by you. Investment in securities market are subject to market risks, you are requested to read all the related documents carefully before investing. You should carefully consider whether trading/investment is appropriate for you in light of your experience, objectives, financial resources and other relevant circumstances. PhillipCapital and any of its employees, directors, associates, group entities, or affiliates shall not be liable for losses, if any, incurred by you. You are further cautioned that trading/investments in financial markets are subject to market risks and are advised to seek independent third party trading/investment advice outside PhillipCapital/group/associates/affiliates/directors/employees before and during your trading/investment. There is no guarantee/assurance as to returns or profits or capital protection or appreciation. PhillipCapital and any of its employees, directors, associates, and/or employees, directors, associates of PhillipCapital’s group entities or affiliates is not inducing you for trading/investing in the financial market(s). Trading/Investment decision is your sole responsibility. You must also read the Risk Disclosure Document and Do’s and Don’ts before investing.
Kindly note that past performance is not necessarily a guide to future performance.
For Detailed Disclaimer: Please visit our website www.phillipcapital.in IMPORTANT DISCLOSURES FOR U.S. PERSONS This research report is a product of PhillipCapital (India) Pvt. Ltd. which is the employer of the research analyst(s) who has prepared the research report. PhillipCapital (India) Pvt Ltd. is authorized to engage in securities activities in India. PHILLIPCAP is not a registered broker‐dealer in the United States and, therefore, is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. This research report is provided for distribution to “major U.S. institutional investors” in reliance on the exemption from registration provided by Rule 15a‐6 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any U.S. person, which is not a Major Institutional Investor.
Any U.S. recipient of this research report wishing to effect any transaction to buy or sell securities or related financial instruments based on the information provided in this research report should do so only through Rosenblatt Securities Inc, 40 Wall Street 59th Floor, New York NY 10005, a registered broker dealer in the United States. Under no circumstances should any recipient of this research report effect any transaction to buy or sell securities or related financial instruments through PHILLIPCAP. Rosenblatt Securities Inc. accepts responsibility for the contents of this research report, subject to the terms set out below, to the extent that it is delivered to a U.S. person other than a major U.S. institutional investor.
The analyst whose name appears in this research report is not registered or qualified as a research analyst with the Financial Industry Regulatory Authority (“FINRA”) and may not be an associated person of Rosenblatt Securities Inc. and, therefore, may not be subject to applicable restrictions under FINRA Rules on communications with a subject company, public appearances and trading securities held by a research analyst account. Ownership and Material Conflicts of Interest Rosenblatt Securities Inc. or its affiliates does not ‘beneficially own,’ as determined in accordance with Section 13(d) of the Exchange Act, 1% or more of any of the equity securities mentioned in the report. Rosenblatt Securities Inc, its affiliates and/or their respective officers, directors or employees may have interests, or long or short positions, and may at any time make purchases or sales as a principal or agent of the securities referred to herein. Rosenblatt Securities Inc. is not aware of any material conflict of interest as of the date of this publication Compensation and Investment Banking Activities Rosenblatt Securities Inc. or any affiliate has not managed or co‐managed a public offering of securities for the subject company in the past 12 months, nor received compensation for investment banking services from the subject company in the past 12 months, neither does it or any affiliate expect to receive, or intends to seek compensation for investment banking services from the subject company in the next 3 months. Additional Disclosures This research report is for distribution only under such circumstances as may be permitted by applicable law. This research report has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient, even if sent only to a single recipient. This research report is not guaranteed to be a complete statement or summary of any securities, markets, reports or developments referred to in this research report. Neither PHILLIPCAP nor any of its directors, officers, employees or agents shall have any liability, however arising, for any error, inaccuracy or incompleteness of fact or opinion in this research report or lack of care in this research report’s preparation or publication, or any losses or damages which may arise from the use of this research report.
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Investing in any non‐U.S. securities or related financial instruments (including ADRs) discussed in this research report may present certain risks. The securities of non‐U.S. issuers may not be registered with, or be subject to the regulations of, the U.S. Securities and Exchange Commission. Information on such non‐U.S. securities or related financial instruments may be limited. Foreign companies may not be subject to audit and reporting standards and regulatory requirements comparable to those in effect within the United States.
The value of any investment or income from any securities or related financial instruments discussed in this research report denominated in a currency other than U.S. dollars is subject to exchange rate fluctuations that may have a positive or adverse effect on the value of or income from such securities or related financial instruments.
Past performance is not necessarily a guide to future performance and no representation or warranty, express or implied, is made by PHILLIPCAP with respect to future performance. Income from investments may fluctuate. The price or value of the investments to which this research report relates, either directly or indirectly, may fall or rise against the interest of investors. Any recommendation or opinion contained in this research report may become outdated as a consequence of changes in the environment in which the issuer of the securities under analysis operates, in addition to changes in the estimates and forecasts, assumptions and valuation methodology used herein.
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