Yarn spinning stocks are started to move for explosive rally ,as all spinners are making huge profits reflects in latest quarterly earnings .
What are the sector leaders here, i guess Trident, vardhaman, does Alok also has significant presence?
Acc. to this article, steel prices may correct because of Russia exporting more steel, but question is how big player is Russia in steel market ? If it is insignificant or small, the prices may not be affected at all.
Criticism invited.
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Global Steel Demand forecast (Source: JSW Steel Annual Report FY21). Report reasserts what is being widely talked about, that a new commodity super cycle has begun, typically lasting between 5 to 17 years. For India, the report projects a growth of 19.8% for 2021 and 5.9 % for 2022.
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Encouraging progress for India exports to US of Apparel during May 21
US total imports Increases 6.4%
India Exports raise to 21%
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When output falls, prices rise. But this article mentions its otherway around - output falls iron ore price also falling. I am unable to get why - future supply increase ? If it’s actually future supply increase, then will this affect the current steel rally ?
The article states that if steel output falls, then the demand for Iron Ore will fall along with expected higher output by miners. Hence Iron Ore price drop expectation is fine.
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Thank you 
Came across this video which talks about Rubber price increase due to disruption of supply chain and impact on Covid on South-Asian economies…
A quick search and the past 30y rubber prices is as follows…
Source: Rubber - Daily Price - Commodity Prices - Price Charts, Data, and News - IndexMundi
I have no experience with commodities. Do the experts in this forum feel that rubber price trend has reversed? Any opportunities in India?
Disclaimer: Not seeking stock ideas… Just want opinions from experts on whether there is a long term commodity cycle play here…
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some more good news for cotton textile companies.
US Senate passes bill to ban all products from China’s Xinjiang - Textiles (specially cotton)
Xinjiang Province:
~Produces 80% of China’s cotton.
~35% market share in apparel exports of the global trade.
“U.S. Senate Backs Bill to Ban Xinjiang Goods Unless Waiver Given”
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This has to be passed in house too. This banning is not officially implemented yet by USA govt
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China has consumed almost 350mnt of extra steel in last 5years, that is equal to 4 India. The most bullish forecast for next 5years is just 35mnt. Our study of the cumulative per capita consumption shows that street might be under estimating demand once again.
Source: The impossible trinity...
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Lot of insightful info. Thanks a lot for sharing here. Appreciated.
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Wonderful write up @Rakesh_Arora sir! There appears to be more demand pull factors than supply because no significant capacity expansion has happened is the thing what interests stock market veterans in steel sector.
One non- market related question -
Rakesh sir, you are a CFA holder. How does CFA help you in regular work ? Maybe in analysis, do you use what’s taught in the CFA course in analyzing the businesses ?
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thanks for your wonderful session on BQ today.
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@Rakesh_Arora very insightful as usual. My gut feel is that China remains the biggest risk to the steel story in 2-3 years
- China continues to build steel capacity (at a much slower pace yet more than anybody else as you noted) by adding more efficient, less polluting BF. So despite shutting down older plants for decarbonization, there still might be net additional low-cost capacity coming on stream in next 2-3 years
- As infra projects scale down globally in 2-3 years, demand may also taper (or collapse) simultaneously, potentially leading to price crash
- Will China be willing to let it’s commodity exports drop across the board for an extended period while allowing its domestic commodity industries to suffer, especially during a super-cycle
Thoughts on likelihood of this counter-narrative playing out?
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I did CFA long back, it does provide a good grounding of concepts but nothing helps more than learning on the ground and your mistakes.
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- China will continue to add EAF replacing old BFs, but maybe their capacity might go up even further for next few years due to timing mis-match. Though availability of scrap has been a constraint recently to ramp up these capacities.
- In commodities investing 2-3years is a long period, not thinking beyond at the moment. But yes, slow down will happen as incentives are weaned off. And that’s why I tend to focus only on sustainable earnings which companies can make on average across cycles.
- China is moving up the value chain, so they will drop exports of low value added products in favour of higher value added products. So less steel but more cars, white goods etc
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That’s helpful. Thank you sir.
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