Published on 14/11/2017 5:25:58 PM | Source: Kotak Securities Ltd
Weekly Metal Sector Update 10 November 2017 - Kotak Sec
Global news and update on prices Global updates/news impact
• MMG Resources officially opened Dugald River zinc mining project built at a cost of US$550 mn earlier last week, ahead of its original schedule. This mine is located in Queensland, Australia and will process 1.7 mtpa of ore-producing 170,000 tons of zinc-in-concentrate.
• The European Commission (EC) has opened an in-depth review to assess an Arcelor Mittal-led consortium's proposed €1.8 bn ($2.1 bn) acquisition of Italian steel company Ilva. Among the commission's concerns is that the merger may reduce competition in hot-rolled, cold-rolled and galvanized flat steel products.
If the European flats industry were to consolidate into two major groups, ArcelorMittal/Ilva and Tata/Thyssenkrupp – there would be a significant share of installed sheet capacity owned by just these two groups. As per CRU, the capacity share would be around 70%. While it is uncertain whether this itself shall lead to higher prices, intuitively one might consider that an upside risk to price exists.
Metal price movement during the week
• During the week, LME’s aluminum inventories declined 1% to 1.17 mn tons and zinc inventories declined 6% to 0.23 mn tons. Aluminum prices declined 4% to US$2,085/ton and copper prices declined 2% to US$6,754/ton. Zinc prices remained flat at US$3,267/ton while lead prices increased 2% to US$2,514/ton during the week.
• Prices of 63.5% Fe iron ore fines in China increased 3% to US$63/ton during the week.
• China’s HRC export prices declined 1% to US$565/ton and CIS HRC prices declined 1% to US$540/ton.
• In India, domestic HRC prices remained flat at Rs39,000/ton while rebar prices declined 1% to Rs30,500/ton.
• Domestic iron-ore prices for fines and lumps were flat at Rs1,850/ton and Rs4,100/ton respectively.
• International scrap prices (Rotterdam) were flat at US$283/ton during the week.
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