Ferrous & Non-Ferrous Metals along with stocks to watch out for by Ventura Securities
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CAN STIMULUS PROPEL DEMAND FOR FERROUS & NON-FERROUS METALS?
STEEL - CAN STIMULUS PROPEL DEMAND FOR FERROUS & NON-FERROUS METALS? STEEL - As per the World Steel Association (WSA), Global Crude Steel Production in August 2024 declined by 6.50% YOY (154.87 MT to 144.80 MT). In India, production was 11.90 MT and consumption 12.91 MT. Prices of HRC in September declined by 17% to Rs.48030/ton driven by driven by continued imports from China and Vietnam.
Coking coal prices dropped 38% YOY to $200/ton, driven by muted global steel demand. The decline in coking coal prices reflects weaker demand for raw materials globally. Thus, the decline in steel prices could impact the margins and remain under pressure. The government is considering raising the import duty from 7.5% to 15% to bring import prices to parity.
Several measures introduced by the Chinese government in September to boost domestic demand are expected to positively impact the global steel sector.
ALUMINIUM - Prices rose by 12% YOY to $2457/ton in Sep’24. Driven mainly due to stimulus measures by China and the ongoing bauxite supply constraints besides US FED’s 50bps rate cut. The weaker dollar has boosted demand for commodities.
On the supply side, aluminum prices were also bolstered by the high cost of alumina (Surged by 77% in one year due to a tight bauxite supply. China imports bauxite from Guinea wherein there were disruptions. Emirates Global Aluminium suspended bauxite exports adding strain to the supply side.
COPPER - Prices rose by 12% YOY to $9259/ton in Sep’24. Improved seasonal demand and a more positive consumption outlook for the metal were the supporting reasons. If China provides additional measures to sustain demand and FED comes out with their rate cut program, copper prices would be amply supported.
NICKEL - Prices rose by 18% YOY to $16134/ton in Sep’24. Despite all the favorable China & US FED factors, prices declined as more capacities came online. On the supply side we have a surplus and its oversupplied. Hence Nickel prices would remain sluggish.
ZINC - Prices rose by 14% YOY to $2849/ton in Sep’24. Upticks were for reasons as stated for other base metals. As per ILZSG, world Zinc Mine Production is forecasted to decline by 1.4% and recover by 6.6% in FY24 and FY25. This tight supply and deficit scenario commands an upward trajectory of Zinc prices.
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