Hard Rocks and Heavy Metals

- "Steel long products continue to rise while flat prices languish. Shanghai long steel products –rebar/wire rod rose 1.3%/1.4% w/w respectively while flat products - HRC/CRC dipped 0.2% and unchanged. We continue to see the environment for long products in China slightly better than that for flat products. Inventory at traders’ level edged up 0.2% w/w to 15.0mt."
- "We believe the Chinese steel industry is at a positive inflection point as 40% of the mills have cut production, and both macro and targeted economic policies that have hurt steel demand appear to be on the verge of abating or possibly reversing, which we believe will help demand. After a very painful 1H10, as elevated iron ore prices, macro tightening policies and measures targeted at the property sector in China have left many steel industry executives (and investors) feeling like they have been trapped, we believe China’s steel industry, like a trooper, is ready to storm back. (pls see our initiation report of Angang/Maanshan/Basoteel dated on Aug10 )."
- "Chinese port coal stockpiles cause concern. Chinese thermal coal buyers are seeking to defer the delivery of prompt thermal coal shipments by at least a month. According to a Reuters report, sources from three effected trading firms say that some requests to postpone shipments have come in very late, resulting in a growing number of “distressed” South African and Colombian cargoes being offered in the market. Calls by some Chinese firms to postpone shipments have grown over the past two weeks, a development that is set to hit feeble market
sentiment and potentially push Asian prices lower."
- "Strong July operation production of Shenhua and China Coal Energy. Shenhua produced 18.3mt coal in July, up 2.8% y/y and YTD growth of 3.2% y/y, while its sales volume rose 15% y/y to 25.3 mt with YTD growth of 12% y/y. China coal's July coal production and sales volume rose 7%/4% y/y to 9.9mt/8.9mt and YTD growth of 24% and 38% y/y respectively."
- "QHD coal prices slipped for a third week with port stocks still at a high level of over 7.1mt. Datong mix (5500 calorific value) prices dropped by another Rmb10/t last week to Rmb730/t while the QHD port inventory slipped 3% but still as high as 7.1mt which is c.30% above its "normal” level which could indicate the more downside risk to coal spot prices in the near term."

JPMorgan Asia Pacific Equity Research 20100815

No comments:

Post a Comment