Commodity and Cyclical Plays

https://chemweek.com/CW/Document/94489/IHS-Markit-WPC-2018-Global-ethylene-capacity-maxed-out-through-2022

Pointers for major ethylene producers in India?

There has been a very good rise in BOPET prices. Just FYI. Pricing much better than Q1.

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Some thoughts on a few businesses. Of course, leave the judgement on valuations to market participants.

https://aurumcapital.in/blogs/2018/09/10/musings-on-valuations-of-certain-stocks/

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Diamines & Chem is one I know

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How is idea of playing copper cycle with cubex tubings its debt free status and price to book of less than 0.40 is lookingattractive please share your views all my friends

I think there is a fundamental shift happening in the paper industry. China’s ban on importing waste from the US is the key here. Watch this.

Our paper and paper board exports are improving drastically in recent months

https://phreakonomics.in/export-import/micro?type=exports&country[0]=0&commodity=146&startDate=2000-04-01&endDate=2018-09-01&currency=inr&consolidation=month

And the operating margins for paper companies are increasing - probably due to operating leverage and reduction in price of raw materials, especially if the RM is waste paper.

This is corroborated by the imports data for waste and pulp at an all time high in recent months.

https://phreakonomics.in/export-import/micro?type=imports&country[0]=0&commodity=149&startDate=2000-04-01&endDate=2018-09-01&currency=inr&consolidation=month

So to sum up, China bans US waste, which makes its paper more expensive, this reduces price of waste for us and also improves demand for Indian paper companies - two factors working in unison.

Disc: Invested in a couple of paper companies in the last few weeks.

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I think China has also banned Indian used paperboard imports. In my local area, its price has crashed from Rs 8 per kg to Rs 2 per kg in just one quarter. On the contrary, paper prices (especially uncoated copier paper) are increasing day by day. It represents an unique opportunity for Indian paper producers.

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Hi phreakv6, my two cents follows:

I have been following the paper industry recently, and my inferences were similar to yours. However, what I am less certain about is if this is a shift that will last long. Unlike the graphite story, the paper imports ban doesn’t seem to be a structural ‘pollution’ related action by China. My reading is - there is a bit of that, but not as much so. It is also a bit of a trade move, and could change. Secondly reduction in price of waste isn’t good for the leading paper companies (West Coast, JK etc.) I think. This I am less certain about as I don’t understand it fully, but I think they are benefiting from the export lift and they actually will lose share in domestic market due to lower price for waste imports. So any change in China’s ban in importing waste will quite quickly change things.

Disclosure: I had a holding in one of the companies, but have exited now. I might regret it as I usually do when it comes to my timing in the markets. :slight_smile:

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Cubex tubings and balasore alloys looking good at current valuations please suggest sectoral trendsforthis companies

In cylical plays, I would definitely recommend looking at ‘Private Capex Recovery’
Looking at the likes of L&T, Thermax, Cummins, etc
As we all know, Government capex has been growing at a great pace last 3-4 years.

In private capex, unfortunately after 2012, there has been no visible growth.
FY04-FY12, we witnessed a great run in private capex focused companies.
Private capex formed a huge chunk of L&T order book then.

Now if we see, it has almost halved from its peak levels. The reason for this is utilization levels weren’t picking up.
Now they are inching up and has reached close to 75%!. Around these levels, companies start announcing capex and thats when these pvt sector capex focused companies stand to benefit.

So I believe its a cyclical play.
My best bet would be L&T is this. Actually too big to fail. It is a portfolio stock. One must hold it definitely. Public capex is doing well, if private picks up, it would be the best beneficiary.

The article below captures its key points and gives me more confidence to buy L&T at these levels

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Copra prices down over 30% from Jan highs of Rs 145 per kg.

Which biscuit companies will be gainer??

marico will get best benefit?

Yes , marico and they had also taken price hike as per last con call to pass on copra price increases so they will benefit in margins from this qtr onwards.
Bajaj corp some product were benefitting as they had non copra based oil and some higher segment Bajaj corp oil had become more cheaper than copra based so they might suffer from this.

https://www.bloomberg.com/news/articles/2018-09-24/china-is-adding-more-coal-capacity?srnd=premium-asia

https://www.bloomberg.com/amp/news/articles/2018-09-21/goldman-backs-commodities-as-investors-shrug-off-trade-war-shots?__twitter_impression=true

Is it time to create /add position in Hind copper, the only pure copper play in India?