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Monday, December 27, 2010
China Demand Drives Raw Materials Higher
By DONALD H. GOLD, INVESTOR'S BUSINESS DAILY Posted 12/23/2010 06:06 PM ET
Imagine a vast country that, after being held back for decades by Maoism, must build almost everything from scratch.
By now you know the story: Pro-business policies and cheap labor helped China become the factory to the world. New wealth means new investment in public- and private-sector infrastructure. A new consumer class means new demand for goods, everything from toy cars to real cars.
What does China need to meet its industrialization, modernization and consumer needs? Raw materials, such as copper, coal, iron ore, zinc, lead, aluminum, oil and gas.
London-based metal ores producer Rio Tinto(RIO), featured in this column on Thursday, announced on Wednesday its $3.9 billion acquisition of Australian miner Riversdale Mining, which owns huge coal properties in Mozambique.
China's relentless demand has lifted prices for steel and steel's ingredients: iron ore and coke. That's been a major factor in the success of mining stocks. Many of the leaders in that industry are foreign companies.
Here are some other highly rated names from IBD's Mining-Metal Ores group :
Australia's BHP Billiton (BHP), a producer of metal ores, coal, oil and gas, is trying to bust out from a slightly short cup-with-handle. But volume is dry. The company is expected to report a 38% earnings hike in fiscal 2011, which ends in June, and 59% for fiscal 2012.
Brazil's Vale (VALE), a big-cap stock, has been trading tightly for the past three weeks with support at its 10-week moving average. That action may be seen as a high handle to a cup that started in November.
Iron ore makes up 59% of Vale's output, nickel accounts for 13%. Aluminum, copper, manganese and coal make up the rest. Vale logged triple-digit EPS gains for two straight quarters, and is expected to make it a three-peat in Q4.
Canada's Thomson Creek Metals (TC) is a producer of molybdenum, a precious metal that can be used to make high-strength steel alloys.
The company saw profit surge 227% in Q3, with a consensus estimate of a 50% gain for Q4. After-tax margin in Q3 leapt to 32%, its highest in years.
South Africa's Impala Platinum Holdings (IMPUY) produces platinum-group metals. Platinum, palladium and rhodium are key ingredients to the catalytic converter. China's booming auto sector is a source of hot demand for the PGMs .
Impala suffers from negative three- and five-year EPS growth rates. Total fund ownership is falling.
The stock trades just 3,000 shares per day in the U.S. But on its primary listing in Johannesburg, Impala trades 1.9 million shares.
NMDC to lift iron prices by 3% in Jan-Mar qtr: Report
India's top iron ore miner, NDMC, is likely to raise iron ore prices by 3% for the January-March quarter on rising demand and a squeeze in global supplies, the Economic Times said, citing an unnamed company official.
Quarterly prices for the ore will be decided on December 29, the paper said, citing chairman and managing director Rana Som.
Offers of Indian ore fines with 63.5 iron content stood at USD 177 to USD 179 per tonne on Monday, CFR (cost and freight) delivered to China, unchanged since the middle of last week.
NMDC supplies iron ore to Japan's Nippon Steel, Kobe Steel, Mitsubishi Steel, JFE and South Korea's POSCO . NMDC officials were not immediately available for comment.
Steel scrap prices up in Russia
Turkish scrap exporters turned back to Russian and CIS markets due to prices boost in Turkish market, which was caused by limited offers from Europe and the USA. The US scrap suppliers increase the prices due to domestic consumption growth and imports from China. The latest offers from the USA are at the level USD 445 per tonne to USD 450 per tonne for HMS1&2 80:20 and SHROT correspondingly.
In Europe bad weather conditions resulted in scrap collecting volumes decrease. This caused prices boost in EU domestic market. Thus European exporters increase their prices as well. In this situation scrap prices at Azov and Black sea ports are almost the lowest. Eventually spot prices hiked to USD 415 per tonne to USD 420 per tonne C&F. January offers reach USD 440 per tonne C&F.
Scrap prices jump in global market affected Russian domestic prices. During recent weeks exporters’ buying prices in Rostov port were not lower than RUB 9,100 per tonne to RUB 9 200 per tonne. Currently the port stevedores’ prices are RUB 9400 per tonne to RUB 9,500 per tonne and continue to grow.
Russian local consumers have to follow exporters’ prices. The buying price at steel mills in Russia have to be at least by RUB 100 to RUB200 rubles higher than at a port. Thus, the competition between steel mills and the exporters of south of Russia is expected.
Friday, December 24, 2010
Ferrous scrap remains strongly supported,US deal heard at $470/mt
There was no letup in steel scrap prices before the holiday season kicked off, with a US supplier heard Friday getting $470/mt CFR Turkey for HMS I/II (80/20 blend) material.
The trade included shredded scrap at $475/mt CFR Turkey and bonus at $480/mt CFR, a trader said. Shipment sizes on the single cargo transaction were unable to be immediately confirmed. The prices are $10/mt higher than US trades into Turkey last reported by the market earlier this week. A UK-based scrap supplier was rumored to have achieved a similar price on a CFR Turkey basis but this was not confirmed by traders.
Platts lifted its assessment for HMS I/II (80/20 blend) $3 to $468/mt CFR Turkey. The grade's FOB Rotterdam assessment rose $3 to $438/mt.
Earlier this week, a UK cargo of HMS I/II (80/20 blend) material was heard traded at $458/mt on Wednesday, with a portion of HMS I/II (70/30 blend) getting paid at $449/mt.
As worsening winter conditions in northern Europe and the US further threaten scrap supplies, prices for material delivered to yards for processing are said to be rising. The A3 scrap market in Russia and Ukraine would likely see complimentary price direction, despite the usual lack of trades over the winter period.
The Platts A3 scrap FOB Black Sea assessment saw a $3/mt rise to $457/mt.
The scrap market has seen the strongest pricing this month compared with semi and finished long products, with the benchmark Turkey CFR assessment gaining 14% from December 3. Billet prices in the Black Sea have risen 6.1% over the same period to $605/mt FOB as of Friday, while Platts regional rebar assessment has gained 8.2% over December to $660/mt FOB Turkey. --Hector Forster, hector_forster@platts.com
Similar stories appear in Steel Markets Daily. See more information athttp://www.platts.com/Products/steelmarketsdaily
Monday, December 20, 2010
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