ValuePickr Forum

Commodity and Cyclical Plays

(PS) #862

Hi @jitenp

There were lot of reports n articles on cement price hike.

But today CNBC was showing some report which says there is a price roll back and high supplies

Any clear idea what exactly is ground situation?

1 Like
(Jiten Parmar) #863

Not tracking that sector. So cannot comment. One thing which always worries about is the long term of this sector. There is a lot of disruption.

3 Likes
(Jiten Parmar) #864

In one of the articles recently, I had mentioned that sustainability of south cement sector needs to be watched. There can be some reversals. But situation is still better than before. What I am saying, is worst might be over.

5 Likes
(Tejas83) #865

Hi @jitenp,

I am trying to understand the copper sector cycle and what stage it is in right now. What are your thoughts on the copper cycle (if you have been following it)? Please share some ideas on how you determine the phase it is in.

I tried to analyze Hindustan Copper. Based on OPM trend (increasing) and PE (decreasing), i think that it may not be a good time to buy. Please correct my understanding.

Thanks!

3 Likes
(pennywise) #866

In case it helps :

  1. Average LME price in Feb 2019 was US$ 6278/MT as compared to US$ 5932 in January 2019. Average price for the whole of 2017-2018 was US$ 6444.

  2. Copper stocks held at LME, COMEX and SHFE declined 1% at the end of january.

  3. Hindustan Copper in Feb 2019 produced only 1400MT of copper cathode even though their capacity is 49,500 MTPA or appx 4125 MT per month. Similarly HINDALCO produced only 25115 MT in february even though they have an annual capacity of 500,000 MTPA or appx 41666 MT per month.

4 Likes
(Raja) #867

Sir,

Are you still invested in Rain and Prakash Inds?

1 Like
(Raj A A) #868

‘Cement Industry Volume Growth Doubles During April-January’

Our Bureau (ET dt Mar 29, 2019)

Pune:

The cement industry saw a 13.6% year-on-year increase in volume to 275.7 million metric tonnes in the first ten months of the current fiscal, driven largely by rural and affordable housing, according to a report by credit rating agency ICRA.

The growth was almost double the 7% increase forecast by the agency.

However, ICRA said that the sharp increase is unlikely to translate into meaningful profit growth or improved margins during the year owing to the inability of the industry to secure any significant price increases and because producers have been subjected to cost pressures for much of the year.

“We expect volume growth at 8% for FY20 driven largely by rural and affordable housing demand and improved focus on infrastructure segments — mainly road, metro and irrigation projects,” said Sabyasachi Majumdar, group head-corporate sector ratings at ICRA, talking about the next fiscal.

At the pan-India level, prices in most markets were 3-8% lower between April 2018 and February 2019 than a year ago, according to ICRA.

2 Likes
(Raj A A) #869

El Niño may Overstay, Impact Monsoon: Met
Avg max temperatures to rise in central, NW India
Our Bureau (ET Mumbai edition, dt April 01, 2019)
New Delhi:
Average maximum temperatures over parts of Central and northwest India are expected to be up to 1
degree Celsius over the normal over the next three months, the India Meteorological Department (IMD)
has said.
The weather office has also established the development of rainbusting El Niño over the Pacific Ocean,
which will persist till June this year. The persistence of the phenomenon could negatively impact the June
to September southwest monsoon season which delivers 70% of the country’s annual rainfall.
The seasoned averaged maximum temperatures are likely to be warmer than normal by 0.5-1 degree
Celsius over Haryana, Chandigarh, Delhi, West and East Uttar Pradesh, West and east Rajasthan, west and
east Madhya Pradesh, Chhattisgarh, Jharkhand, Odisha, Gujarat, Madhya Maharashtra, Vidharbha,
Marathawada, Coastal Karnataka, North Interior Karnataka, Rayalaseema and Telangana.
IMD said that above normal heat wave conditions are also likely in the core heat wave zone during April
to June. “There is about 44% probability of maximum temperatures in the core heat wave zone during
April to June to be above normal,” the weather office said in a seasonal forecast issued on Monday.
The core heat wave zone covers states of Punjab, Himachal Pradesh, Uttarakhand, Delhi, Haryana,
Rajasthan, Uttar Pradesh, Gujarat, Madhya Pradesh, Chhattisgarh, Bihar, Jharkhand, West Bengal, Odisha
and Telangana and meteorological subdivisions of Marathawada, Vidharbha, Madhya Maharashtra and
coastal Andhra Pradesh.
The seasonal average temperatures over west Rajasthan are likely to be above normal by more than one
degree Celsius, the forecast said.
Most of east and northeast India, and the western Himalayan region are expected to experience near
normal temperatures, meaning the departure from normal temperature will be between -0.5 to 0.5 degree
Celsius.

(Amit) #870

Dalian iron ore finished at ¥662.5, highest close since Chinese futures launched in 2013, according to Reuters.

https://t.co/kNVI8o3JVt

Essay On Sector Rotation
(Jiten Parmar) #871

Ultratech Cement: 4QFY19 Call highlights

Demand Trend

  1. Institutional demand is rising in the country. Affordable housing has started picking in multiple towns; Industry growth at ~10% YoY in 4QFY19.
  2. Annual demand in Industry stood at 340MMT for FY19 versus Installed capacity of 480MMT. Out of the installed capacity, several plants are not running optimally
  3. 12MMT of capacity was commissioned during FY19 including 4MMT in Q1, 3MMT in Q2 and 5MMT in Q3. Factoring in the gradual ramp up of these capacities, FY19 had effective new capacity addition of 6MMT only.
  4. Expect 15-20MT of new capacities in FY20 versus expected demand growth of 28-30MT (implies 8.5% YoY growth).
  5. Seeing deceleration in demand in April and May, attributable to restriction in movement during elections.

Price Trends

  1. Industry has witnessed selling price increase led by strong demand and improving Industry utilisation; Exit prices were higher versus average in 4Q. Didn’t comment on price hikes in April. Improvement in regional capacity Uti has allowed industry to pass through higher costs.
  2. For Ultratech, increase in realization by 1% on QoQ basis.
  3. Sees strong chance of price improvement in FY20.
  4. Sees channel inventory of 2-3 days – haven’t seen any major increase in March end.

Cost trend

  1. Most benefits of recent Industry-wide cost reductions are factored in the 4Q performance. Full axle load impact is captured in the costs now
  2. Benefits accruing of synergies because of recent acquisitions, procurement and operating leverage
  3. Company has locked in fuel prices till H1. Petcoke prices have seen reduction by 7%. US coal has become an attractive fuel option and thus Petcoke is not the standalone parameter for energy consumption now.
  4. Other expense were lower QoQ on account of lower maintenance costs. Maintenance cost is typically higher in 2Q and 3Q
  5. Lead distance for the Company now stands at 400km (hovers in 395-405km). As Company ramps up volumes from Nathdwara unit, this could come done further by 15km. Lead distance used to be 450km earlier. Rail is 26% of freight mix and has fallen from 30-35%; once DFC commission takes place, rake availability will improve

On Nathdwara/Binani

  1. Volumes from Binani Cement during 4Q at 0.975MMT; Avg utilisation at 62-63%
  2. Operating EBITDA/T of Rs830/T excludes one-off cost impact of Rs160/T (legal and forex related costs). These one-offs had an impact on 4Q performance, which should subside going forward.
  3. Targeting further cost reduction of Rs50/T in FY20.
  4. Expects benefits on logistics cost related to DFC rollout. DFC passes close by the Binani plant – should help the logistics costs
  5. Expect PBT breakeven by Q4 FY20, with 85% utilisation.
  6. Overseas operations are held for disposal now. Asset held for sale can garner Rs600cr
  7. EBITDA/T income related to Nathdwara has no impact on standalone operations. There is overlap in costs between standalone and Nathdwara Sub on account of clinker transfer and related logistics
  8. There are logistics synergies for company on account of transfer of clinker from Aditya Cement plant (of UTCEM) to Neem Ka Thana (unit of Nathdwara) and as well related to supply of clinker from Nathdawara plant (of Binani) to Wanakbori Grinding (unit of Ultratech in Gujarat).

Other details

  1. Expect FY20 Capex at Rs1500-2000cr including maintenance and capex on projects like development of Bicharpur Coal block, Bulk terminal development in Mumbai, WHRS plants across 4 locations, Wallcare putty plant in Nathdwara, Bara Grinding unit. Total project capex at Rs700cr attributable to these projects and balance towards maintenance costs.
  2. WHRS plants: Company added 26MW of WHRS capacity in FY19 taking total capacity to 85MW. Management expects to add further WHR units at 4 locations taking capacity to 131MW by by FY21 end. Post expansions, WHRS would service 12% of power requirement of company.
  3. Expansions: Decision on Pali and Nathdwara Capacity not yet taken – Nathdwara expansion is a priority. Bara expansion is delayed – GU should commission by June-19, clinker is available in plenty from nearby plant anyway. Legal clearance for the Dalla Super expansion expected only after elections, Clinker plant should get commissioned inline with Grinding expansion
  4. Capital employed for the company has moved from Rs260bn in FY14 to Rs550bn in Mar-19 – impacting ROCEs of the Company.
  5. Trade mix improved to 66% in 4Q. Blended Cement mix at 65% in 4Q
  6. No guidance on the profitability outlook on the Century assets
  7. Consolidated volumes for UTCEM at 22.26MMT
  8. Debt repayment of Rs535cr expected in FY20; Biggest repayment comes in FY22 of about Rs2300cr. Management targets deleveraging over near term – target to touch 2x net debt/EBITDA.
6 Likes
(rajidse) #872
(Amit) #873

Graphite prices remain high as supply-side shortages combine with growing battery and electrode demand

1 Like
([email protected]) #874

A quick Q, does the graphite produced by GI and HEG being used in the Lithium-ion battery industry?

(roomy) #875

they both produce graphite UHP electrodes only , i think

1 Like
([email protected]) #876

No they only produce electrode for the steel industry

1 Like
(yourraj) #877

Up date on Ferro chrome in EU Market

Will that be true in this quarter in Asian Markets as well ? I don’t know … BUT Metal stocks are out of flavor … So MAy be the a value bet in long Terms @jitenp Cloud you please share your Views on this
Sector
Regards

(Amit) #878

BHP indicates no interest in further thermal coal investment; bullish on nickel with plans to increase exploration and acquisitions to supply #EV market.

Dalian iron ore futures reach $106 - highest since 2013 launch.

A lack of mine supply growth will lead to shortages in the refined copper market both this year and next, according to the International Copper Study Group (ICSG) - deficits of 189,000 tonnes in 2019 and 250,000 tonnes in 2020.