INDUSTRY UPDATES - 27/04/2013

JSPL shares hit 52-week low on disappointing Q4 results

Shares of Jindal Steel and Power (JSPL) today fell by over 3 per cent to hit a 52-week low level as the company’s consolidated net profit fell by nearly 35 per cent for the quarter ended March 31.
After making a weak opening, shares of the company further lost 3.13 per cent to Rs 318.50 — its 52-week low as the trade progressed on the BSE.
At NSE, the scrip went down by 3.34 per cent to touch a one-year low of Rs 318.20.
Hit by rising interest burden and lower sales realisations, JSPL’s consolidated net profit fell by nearly 35 per cent to Rs 760.27 crore for the quarter ended March 2013.
The Company had reported a net profit of Rs 1,167 crore in same quarter of previous fiscal.
Net sales during the fourth quarter of 2012-13 reported a growth of 2.16 per cent at Rs 5,583.33 crore. The company had reported a net sales of Rs 5,465.26 crore in the January-March quarter of 2011-12.

Flour mills’ buying holds up wheat

After witnessing a fall earlier this week, dara wheat and flour prices remained unchanged on Friday.Steady domestic demand coupled with ample stocks kept dara wheat and flour prices unchanged, said Radhey Sham, a trade expert.
About 60,000 bags of dara wheat arrived at the Karnal grain market terminal. Government agencies procured most of the produce that arrived.In the physical market, dara wheat quoted at Rs 1,410-1,415 a quintal.
Mill delivery was at Rs 1,410 while delivery at the chakki was Rs 1,415.On the National Commodity and Derivatives Exchange, wheat futures traded positive today.
Wheat for May contracts increased by Rs 3 at Rs 1,481 with an open interest of 11,300 lots. It had touched a high at Rs 1,484 earlier in the day. June contracts went up by Rs 5 at Rs 1,506.
Wheat futures trade positive on account of stockists buying against restricted arrivals. Fresh buying by flour mills to meet the current demand kept wheat prices at current levels.
According to the market experts, wheat futures are expected to rule lower next week.Wheat spot prices improved at Rs 1,385.

Sugar position comfortable for next 3 years: K.V. Thomas

Sugar production is seen satisfory for the next three years as output is expected to be above the domestic demand, said Food Minister K.V.Thomas on Friday.
"The next three years 2013-14, 2014-15 and 2015-16 will be comfortable for sugar," Thomas said based on the recent review of the performance of the sector with industry officials. He was speaking to reporters on the sidelines of an event organised by the Bureau of Indian Standards.
"The domestic requirement is about 22 lakh tonnes and we have enough sugar for exports," Thomas said adding that the shipments would depend on the prices in the international markets. Currently, it is unviable for the Indian millers to export sugar as the international prices are currently lower than the domestic prices.
"However, going ahead, our sugar production and productivty and value addition needs to be improved," Thomas said. In this context, a draft paper has been prepared by the Food Ministry on the improvements needed in the sugar sector. In the third week of May at the National Institute in Kanpur, we will chalk out the various projects to be taken up for the improvement of sugar sector, Thomas added.
India's sugar production declined to 24.6 million tonnes, down from the 26 million tonnes produced in the previous year. However, in 2013-14, the production may decline marginally due to the drought in key sugarcane growing areas of Maharashtra and Karnataka.
Iron ore steels for a fall as China growth eases
Iron ore prices have staged a strong rebound since falling last autumn to their lowest level since the global financial crisis in 2009 but analysts expect prices to edge moderately lower in the next few years on slow Chinese demand and addition of new supply.

The key swing factor for prices is the degree to which new mining projects are cut back, delayed or cancelled. On the demand side, analysts generally agree that China's iron ore consumption is unlikely to return to the high growth rates of the past.

Deutsche Bank research said that the broader market is coming to the conclusion that the super cycle which characterized many metals and materials markets over the past decade is now over. China is approaching a maximum in terms of consumption intensity for steel.

The broader market is coming to the conclusion that the super cycle which characterized many metals and materials markets over the past decade is now over.

The investment bank's analysts expect China's steel output growth to pick up to 5% this year from 4% last year but fall to 2% next year and in 2015. Their view was echoed by industry consultancy AME Group chairman Mr Shaun Browne, who projected output to grow an average 3.4% per year between 2010 and 2020, down from 15.2% in the previous decade. He made the projection at the Mines and Money conference in Hong Kong last month.

Mr Browne said that "The days of China endlessly controlling all of the world's iron ore demand growth are ending. Prices of imported ore with 62% iron content at the Tianjin port hit 16 month high of USD 158.50 per tonne on February 20 after rising from a trough of USD 86.70 in September. But prices have since declined with the commodity trading at about USD 140 since late last month.”

Mr Browne expected demand growth for Chinese iron ore to start falling this year and continue to do so until at least 2017, given imports were expected to keep rising as local ore grades deteriorated and losses cost competitiveness. Production costs at most local mines range between US$100 and USD 125 per tonne, making the operations vulnerable to losses when prices fall.

He said that but some small uneconomic domestic mines could take longer than expected to shut down given their role in providing employment, while others were surprisingly efficient" thanks to technology and good management. Still, as time passed, the already low ore grade of domestic mines would fall further, forcing the shutdown of more mines.

Mr Browne projected that the four big Australian and Brazilian iron ore miners which together account for about 55% of global output would still account for half of that production in the next five to seven years. IRC, an iron ore miner in Russia's Far East is joining in to displace the market share of Chinese miners.



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