My personal view is EV will not have big impact till the price of electric vehicles are subtantial lower. The vehicle boom was started by low level vehicles like Maruti 800, zen or Santro etc wich we’re in the price range of 4 to 6 lacs. why should I spend 12 or 15 lacs just for electric vehicle ? We all are basically selfish by nature .
Users may not have a choice because of 1) technology development tends to grow in log scale and price will reduce consequent to that, 2) EV or Hybrid will get much more prevalent and sought after and 3) it is likely to get mandated and ICE vehicles priced out of the market with more and more stricter pollution norms.
Look at Eicher. They are being forced to stop the 500cc bikes because they cant make it commercially viable with BS-6.
The replacement of autos is likely to happen much faster than most people are anticipating, in my opinion.
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See this is my personal view . I am putting my self in this situation… why sales of car down suddenly ? 1 ) price of car has increased very much. Why should I spend such amount for electric vehicle. Till battery are improved and becomes cheap price can’t come down. 2) due to traffic and infrastructure bottleneck it’s better for me to use Ola and Uber. My car is parked all the time in parking and I use Uber as it’s more stress free.
I think dynamic of worlds are changing too fast and so consumption pattern .
I think, one of the best ways to play this theme is by investing in Aluminium sector.
Aluminium is one of the most used material that goes into the construction of a vehicle. Its usage is only going to increase as automobile companies are shifting more towards aluminium and its various alloys at the cost of steel, it helps in reducing the weight and thus increases fuel effeciency. It also helps greatly in reducing polluting emissions.
If EVs do make an impact, then aluminium demand is going to only rise further, as much higher amount of aluminium is used in the construction of an electric vehicle. Infact, whether its the batteries or the charging stations or the chassis, wheels, suspensions etc., Aluminium will be one of the most used material everywhere. You can read more here-
https://aluminiuminsider.com/aluminium-industry-riding-to-higher-demand-in-electric-vehicles/
To be honest, I don’t know when EVs will make impact in India, but I think EVs will become mainstream much sooner in developed countries and China, where they have good infrastructure and governments are taking stricter norms for pollution control.
Disc.- Invested in National Aluminium Company Ltd. Aluminium companies are available at very attractive valuations today and I am closely tracking this sector.
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Good point. Extending that logic I feel Himadri Specialty Chemicals would be a further proxy play because of its main product Coal Tar Pitch (CTP).
- CTP is the critical input material used to manufacture anodes which is needed in Aluminum Smelters. More demand of Aluminum, more demand of CTP.
- It also prepares carbon black through the coal tar oil route, which is primarily used as a reinforcement material for manufacturing tyres.
- Also, it prepares advanced carbon material (ACM) from distilled coal tar, and has uses as anode materials in lithium-ion batteries.
So, through a single company we can play Aluminum commodity (a proxy to future of Auto) & Auto cyclicals (present and future).
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I feel Rain Industries would be a better proxy to play aluminium industry. It makes CPC and CTP which are used in aluminium manufacturing, various advanced carbon materials being used in Lithium ion battery and auto industry and coating material for Lithium ion battery. It is geographically diversified across countries where EV adoption will be faster such as North America, Europe and Middle East countries.
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And this too.
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@sujay85, @shivam2k6 - Responses from both of you reminded me similar contents on the thread for Electric Cars on this very same forum in 2017. It all makes sense. I personally also made investments in these names. Two years later, there is an erosion of 60-75% value in these stocks. 
My point is - Significant price reduction in these counters as it stands today does provide a good cushion/margin of error. However, another learning as well this experience has offered us is that Even though a idea/correlation can be very logical from company’s future points of view, that alone is not necessarily enough for capital appreciation or even protection. Timing, strategy for down side protection and discipline are more important 
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Entry points are very important for commodity companies. Not claiming that I no better but feel that a commodity co bought during high price and low supply provides almost no margin of comfort. Alternatively, historical low prices can lead to limited supply and subsequently price appreciation.
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Chinese petrochemical giant Shandong Yuhuang Chemical has been downgraded by rating agency S&P Global because it is “almost certain” to default on two domestic bonds in November and December, in the latest sign of the financial distress in China’s third-largest province.
Shandong Yuhuang Chemical (Group) is a China-based petrochemical group that produces and markets a range of chemicals, including propylene, isobutene, butadiene, isoprene, Styrene, Toluene, and others. It was founded in 1986 and is located in Heze City, Shandong Province, China.
SYCC has 13 subsidiaries including Shandong Yuhuang Chemical Co., Ltd., HuaYu Rubber Limited Liability Company, Heze Yuhuang Chemical Co., Ltd., Shandong Yuhuang Shengshi Chemical Co., Ltd., Heze Huachang Mechanism Technology Co., Ltd. Etc… It also has branches in Hong Kong, Shanghai, Hubei, Henan, Rizhao of China and has registered a new company in the US.
Shandong Yuhuang Chemical has invested US$1.85 billion in the 1.7 million metric tonnes per year methanol plant that is set to start production in mid-2020.
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Sugar mills saw a mixed Q2CFY as sugar volumes were lower due to restrictions on sales (quota) fixed by the government. But this was offset by higher realisations. However, the sugar industry is undergoing transformation with the introduction of minimum sugar prices (MSP), fixed export quotas and increased ethanol blending.
Indian Sugar Mills Association estimates sugar production to decline by 20 percent in SS2019-20 (SS = sugar season) and closing stock is estimated to be around 9.5mn tons. Government has set the MSP for the sugar season at Rs 31 per kg and the market price is between Rs 33 and Rs 34.
Prices are expected to remain strong and above the MSP due to a fall in production levels leading to better realisation and margins for the mills. Higher distillery volumes were aided by the higher lifting of ethanol by OMCs in Q2CFY. Power business, though, was impacted by a reduction in power rates.
With restrictions on sales imposed by the government, the sugar business was under pressure during Q2CFY for most of the mills. Average realisation for Q2CFY was at Rs 33.5 per kg. Margins improved with higher realizations in the quarter. Under the current sugar sale quota mechanism, some relief was given to a few companies to sell higher volumes of sugar on account of higher sugar diversion to produce B-Heavy Ethanol and higher export of sugar.
A boost in the ethanol business came after the government hiked prices and OMCs started floating more tenders for purchases. This resulted in higher volumes and realisations (to reduce the buffer stock, ethanol production is the best way out). Cost of producing ethanol is the same as sugar production but due to higher prices, companies make higher profits and margins on its sale.
Sugar mills are seeing improvement in their ethanol segment for the past one year and they remain positive on enhancing earnings from the segment with the new capacities coming up.
Power co-generation business took a hit after power rate cuts in UP (though it is a small part of the business). The cut of Rs 2 per unit has hit the bottom line of big players like BRCM and DSM. Exports subsidy to help lift higher exports and fulfil the fixed quota allotted by the government will further help earnings and reduce closing inventories.
With the lower sugar production in Maharashtra and Karnataka, UP based sugar mills would benefit from additional sugar sales volume. Also, a reduction in inventory level to 9-10 million tonnes would perk up sugar prices next year. Moeover the increase of sugarcane diversion towards B heavy ethanol and higher sugar exports, sugar inventories may decline next year leading to better margins and realizations.
Due to drought last year in two big states, sugar production till now is still lower YoY and ISMA stick to the sugar production estimate of 26mn ton for the season. They believe sugar prices to remain rangebound close to 33/kg (well above the MSP of Rs.31/kg). With expectation of global deficit of 7-8mn ton next year in sugar, global prices are likely to inch higher.
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Telecom thesis is playing out very well. Companies should get into black in Q4 due to current tariff raise.
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There are reports of red rot disease of sugarr cane. It may lower production. Might support sugar. Prices could someone confirm
report on chemical sector worth readingChemicals - 2Q Review Sector Outlook Top Picks - Sector Update - 02 Dec 19 - BK Research.pdf (1.7 MB)
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Edelweiss report of commodity rebound
economic-spotlight–the-tide-is-turning-commodity-markets-are-ripe-for-a-revival.pdf (932.4 KB)
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My presentation of the talk at CFA Society on Dec 14, 2019 and at FOF, PPFAS on Dec 20, 2019. Understanding cycles. My learnings from understanding business and market cycles.
https://aurumcapital.in/blogs/2019/12/31/the-art-of-understanding-cycles/
Wish you all a happy, prosperous and peaceful new year and decade.
Regards,
Jiten Parmar
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price of most of chemical are firming up especially after crude gone up. supplier are not redy to commit goods at current price.please check with your respective source for further details
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the video link to the above presentation is here.
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Jiten ji what at are your outlook on media basket Because of new mode of communications along with subscription based model coupled with digital content and copyrights isn’t the media stock should be taken as cycle bet as everyone have gadgets and mobiles and quality players such as media 18 broadcast will be a good contendere Could you please share your insight on media basket
Regards
it’s been a difficult sector. and direction is clear. streaming is the way forward. but to bet on which players ? I have not been able to understand all the moving parts.
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