Commodity and Cyclical Plays

I think so…At the bottom. Copper is trending up and inventories are down in LME. HindCopper only serious Copper ore player (concentrate) in India.

Negatives: There have been allegations of financial irregularities in the past, also mine expansion plans are bullish but where will the money come for expansion. QIP will keep the price down…

This price could even go down further if price manipulation happens in the counter. For now, I can see it has bottomed out.

Why to get into HindCopper when quality names are available in the market now ?:thinking:

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From mid-June to mid-Sept metal prices and equities were all off significantly: #copper -18%, #zinc -29%, #nickel -20%, key zinc equities down 30 – 45%, key copper equities down 25 – 35%. Last week base metal prices were up ~8% & equities were up 8–15%

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@aammiitt2 - In the absence of Hindcopper are there any other quality players in this space, the closest would be Hindalco, Vedanta but I dont think they are full fledged copper players, your thoughts?

Vedanta in my view is more of copper refiner who can either source concentrate form HindCopper or Import form overseas. but for now there are questions around the smelter plant in TN. I think there will be resolution in favour of Vedanta eventually, may not happen in near term as the NGT panel is of view to keep it remain close.

Longer term, I would feel Vedanta is a strong player in commodity mix with Petroleum, Gas, Aluminium, Copper, lead, Zinc in mix. I am bullish on Vedanta for long term. I do not cover Hindalco as much as Vedanta. Copper demand will ramp-up as India cannot sustain this huge import deficit due to crude. Overall, demand will be strong post 2020 in copper. Adding to better price realisation is the supply concerns as grades are falling globally and new mines are hard to take to operational phase. Minimum 5 years it takes a mine from exploration to Production. Only a big player like Vedanta, Hindalco and HindCopper with big pockets can develop copper mines. I believe Govt would wish to keep HindCopper in its kitty as it would be like “ONGC of the future”. So stake sale would be measured based on better copper demand and pricing.

Disc: Holding HindCopper, Vedanta and other base metals , alloy players in India. Holding key EV metal companies in Lithium, Copper, Graphite, Pure Alumina and Cobalt companies in overseas market. PF is biased towards commodities. Following EV megatrend unfolding in China, Europe and US. View may be biased. Do your own research.

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Vedanta Chart - I follow Mark Minervini Trend Template to identify which stage a stock is at present. this is for medium to long term investing. Also use other technical indicators.

I believe Vedanta is in Stage 3 - Distribution phase. It has completed Stage 1 i.e. Neglect Phase, Stage 2 i.e Accumulation Phase. Stage 4 is Capitulation Phase. I cannot fully know if the stock has entered Stage 4 yet but I could be wrong as some indications are suggesting that we are in Stage 4 already.

Stage 2 started around 16/05/2016 and it ended around 11 March 2017 where price moved from 95 to 345 i.e Super performance as per Mark Minervini Accumulation Phase expectation.

Stage 3 Started around March 2017 and it is ongoing most likely. For now 52 wk is a good floor for Vedanta. If it keeps on re-testing the 52 wk and cutting it then it suggests this could likely take the price to 155 levels. For now, I can say that 52 wk low is a good buy for this counter.

Thanks @aammiitt2 for the insights, I am quite curious to know (due to lack of knowledge) how can one invest in companies into Lithium, Cobalt plays etc from India, any pointers would be helpful, as I believe there is a long road ahead for EV and holding onto quality names would bring benefits in the future, appreciate your response.

I bought those companies in Australian exchange but not from India. You could find fellow boarders and check if such option is available from the International brokerage in India. You will have to pay a double tax on gains in India and Australia as they have double taxation regime. Better focus on what is available in India. India is sea of opportunities.

Thanks @aammiitt2 for your quick response, makes sense. The play on EV in the Indian context would then be restricted to Hindcopper, Vedanta and to a extent HIndalco.

India and Australia have a Double Taxation Avoidance Agreement (DTAA) since 2011. So you need to pay taxes only in the country where you are the tax resident.

https://www.incometaxindia.gov.in/pages/international-taxation/dtaa.aspx

Heard of “Interactive Brokers” that permit trading overseas (www.interactivebrokers.co.in). Never used it myself.

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Read Article 24.

METHODS OF ELIMINATION OF DOUBLE TAXATION

By default there is double taxation you need to pay but you may get credit under some conditions.

I am not a tax guru and so would not be a position to comment on tax implications. May be best to contact a good tax advisor in India or contact brokerage.

Sir is there any source for finding BOPET/BOPP prices ?

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Lithium ion Batteries Outlook 2020
By the year 2020
BYD Battery Capacity - 60 GWH
CATL - 50GWH
LG Chem - 90 GWH
Tesla/Panasonic - 50GWh

Wood Mackenzie Forecast
2020 Capacity - 346 GWH

Year 2018
Current Capacity - 198 GWH

Most of the capacity will come from China. Lot of EV build up happening in China, Europe and US. No major player in key battery metals in India. Nickle, Cobalt, Lithium. Copper is the EV play in India. Selected Lithium, Cobalt, Vanadium, Nickle junior aussie miners have given over 1000% returns in
2017. Which private mining player do you all see would be key to India ev supply chain? I feel Mruti is the best ev bet for ev journey on 2022 and beyond. Ashok leyland wd be another good bet in commercial space. Ebuses and eRickshaw will be next BEV in India.

https://www.bloomberg.com/amp/news/articles/2018-10-01/for-now-at-least-the-world-isn-t-making-enough-batteries#click=https://t.co/HrrB1kWsVu

Good order win for L&T

Good holding for a long term:
As I had mentioned earlier once private capex starts picking up (in 12 to 18 months), L&T would be in limelight.

This ev jagguarnut wont stop.

The rapid growth in unit sales, subsidy changes are bullish for ev raw material demand as the subsidies promote NEVs with longer drive ranges that will require larger battery packs, as well as higher energy density batteries.

https://www.metalbulletin.com/Article/3835141/Home/No-stopping-strong-global-EV-sales-growth.html

Norsk hydro to shut down its plant in brazil. plant has capacity of 6.4mtpa (10% of global non-china alumina capacity). @jitenp sir, is this trigger strong enough for another alumina rally till $600/tonne?

JSPL posts Highest Ever Domestic Quarterly Steel Production and Sales in Q2 FY 2019

Be careful guys! China is slowing down materially and things might go out of hand if there is no settlement of the trade war with US. It is perfectly possible that they could start the supply tap again to temporarily protect domestic suppliers. It is perfectly possible that despite showing good results, commodity companies might not show improved stock performance. The way interest rates are going up in US it is matter of time that US demand also starts to slow down.

adding a data point … earlier JLR was massacred and now ford. Auto sales are generally great indicator of consumer sentiment.

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I believe textile sector might be turning around.

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Hi Jiten, would be of great help if you share the rationality behind your belief.

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Yes, last quarter concall of Welspun was a good one. Only thing rupee depreciation will nullify the cotton price increase. Because of China, significant cotton will be exported there

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