1. business and industrial
2. energy
3. coal

M o n d ay 1 1 , M ay 2 015
News &
Report Analysis
Currency Market
Precious Metal
Base Metal
Energy Market
Product Launch
 ANZ slashes iron ore price outlook
 PM Modi dedicates modernized and
expanded IISCO plant to the nation
 Rio’s coal boss says a price recovery is
years away
 Japan, EU piqued over India’s ‘safeguard’
probes on steel imports
 Senco Gold rides on Piku range,
plans expansion
Daily
2
Monday 11, May 2015
US equity market closed higher on Friday
term interest-rate futures implied TRADERS
as rebound in US jobs growth boosted US
don't expect a Fed rate hike until December at
equities. The Dow Jones industrial average
the earliest, based on CME FedWatch, as some
closed up 264.98 points, to 18,189.04, the S&P
people focused on the fact that the previous
500 ended up 27.91 points, to 2,115.91 and
month's figures were revised to show a gain of
the Nasdaq Composite finished 58.00 points,
85,000 jobs instead of the 126,000 previously
higher to 5,003.55.
reported.
Asian stock prices rose on Monday as
Besides, Japan's economy was expected
investors cheered China's latest cut to interest
to post a second straight quarter of moderate
rates to bolster its flagging economy and after
growth in January-March, led by a pickup in
Wall Street rallied on a robust headline reading
exports and business investment, a Reuters poll
for U.S. employment. On Friday, all three major
found, pointing if realized to a steady recovery
U.S. STOCK indexes posted gains of over 1
from recession after last year's sales tax hike.
percent, after U.S. Labor Department data
Currency Market
showed nonfarm payrolls increased 223,000 last
month, while the unemployment rate dropped
to a near seven-year low of 5.4 percent.
USD/INR - 08/05/15
63.90
63.96
64.02
64.08
64.14
USD/INR Overnight VAR
Data releases today
It was the third time China announced the cut
in interest rate in the past six months on Sunday.
17:00
16:00
15:00
14:00
13:00
12:00
11:00
10:00
9:00
64.20
0.3537
Forecast
Previous
EUR German WPI m/m
0.4%
1.0%
GBP Official Bank Rate
0.50%
0.50%
Source : Mecklai Financial
As the market analysts predict policymakers
The dollar stood little changed against its
would relax reserve requirements and cut rates
peers after mixed U.S. jobs data failed to offer
again in the coming months.
much of a buying incentive, while sterling
"The timing of the rate cut is well within
currency stood tall after the surprise result of
expectations while the depth of the cut is
British election victory by the Conservative
smaller than many had expected," said Zhang
Party. The dollar was steady at 119.73 yen,
Chen, analyst at Shanghai-based hedge fund
having slipped from an overnight high of 120.24
manger Hongyi INVESTMENT.
after the release of Friday's U.S. jobs numbers.
Among the macro data announcement
The US Dollar Index weakened by 0.6 percent
include US April jobs figures were seen to put
last week after the release of trade deficit data
the Fed on track for a rate increase as early as
which widened to the highest level since 1996
September, a Reuters poll found. But U.S. short-
and ADP Non-Farm Employment data that
Daily
6 mth
LIBOR
3
Monday 11, May 2015
Major
Currencies
Today’s
Crosses
Spot
Cash
v/s INR
0.41
USD / INR
-
ATM Options (put/call)
0.15
Forward Rates v/s INR (Export/ Import)
May
June
July
October
January
April
63.88/ 89
63.85/ 87
64.10/ 13
64.52/ 55
64.93/ 97
66.10/ 14
67.20/ 24
68.26/ 30
-
-
-
0.48/0.48
0.78/0.78
0.98/0.99
1.39/1.43
1.71/1.79
1.95/2.10
EUR / USD
1.1137
71.14/ 16
71.11/ 14
71.41/ 44
71.91/ 94
72.39/ 44
73.81/ 85
75.19/ 23
76.53/ 57
0.14
USD / JPY(100)
119.88
53.28/ 29
53.25/ 27
53.48/ 50
53.85/ 88
54.21/ 25
55.27/ 31
56.32/ 36
57.34/ 38
0.70
GBP / USD
1.5409
98.43/ 45
98.38/ 42
98.78/ 82
99.40/ 45
99.99/ 06
101.73/ 80
103.39/ 45
105.01/ 06
-0.70
USD / CHF
0.9346
68.34/ 35
68.32/ 33
68.58/ 61
69.12/ 16
69.67/ 73
71.24/ 26
72.75/ 78
74.17/ 23
3.06
AUD / USD
0.7881
50.34/ 35
50.32/ 33
50.46/ 48
50.71/ 74
50.95/ 98
51.62/ 65
52.24/ 26
52.89/ 91
Source : Mecklai Financial
came out weaker than the market expectation
down 1 percent, touching a one-month low of
thereby indicating slow economic growth.
$0.7408.
The dollar fared a little better against the
euro, nudged away from a recent peak as a
Precious Metal
recent sharp jump in German bund yields halted
Gold price opened with firm note on
late last week. The euro was little changed at
Monday after data on U.S. job growth in April
$1.1200, having pulled back from a two-month
and downward revisions to previous figures
peak of $1.1392 struck Thursday.
suggested the Federal Reserve would be in no
The dollar was supported by upbeat NFP
hurry to raise interest rates next month.
numbers and unemployment declined in line
Spot gold was little changed at $1,187.80 an
with market expectations of 5.4%. Dollar index
ounce by 0325 GMT after gaining 0.3 percent
made a low of 94.62 and ended at 94.81 levels.
on Friday after the data. U.S. nonfarm payrolls
EURUSD remains lower against USD after strong
increased 223,000 in April, in line with market
employment numbers from US. The currency
expectations of 224,000, but March payrolls
closed below 1.12 levels on Friday. Pound gained
were revised to show only 85,000 jobs were
after UK general elections, however it did trim
created, the smallest number since June 2012.
after upbeat US jobs data. Sterling closed below
The data burnished gold's demand as a safe
1.55 levels on Friday.
haven, while tempering views that a U.S. rate
The pound fetched $1.5435 after surging
rise could come at the Fed's next policy meeting
well over 1 percent to a two-month high of
in June. Spot silver prices in the international
$1.5523 late on Friday, after Prime Minister
markets traded higher in line with gains in gold
David Cameron's Conservative Party defied
expectations and won, relieving INVESTORS
who had braced for a hung parliament and the
political uncertainty associated with it.
The New Zealand dollar remained under
pressure after the country's central bank hinted
Market Highlights - Gold (% change)
Gold
Gold (Spot)
Gold
(Spot -Mumbai)
Comex Gold
last month that it might cut rates if the economy
slowed and inflation stayed low. The kiwi was
MCX Gold
(Jun’15)
Unit
Last
Prev.
day
as on May 08, 2015
WoW MoM
$/oz
1187.7
0.28
0.8
Rs/10
gms
26800.0
-0.19
#N/A
-1.2
YoY
-9.1
0.8 -10.1
$/oz
1189.1
0.57
1.2
-0.9
-7.6
Rs /10
gms
26889.0
-0.17
0.9
0.5
-6.9
Source: Angel Broking
Daily
Monday 11, May 2015
prices the silver rally. Spot silver prices in the
sharp upside. On the MCX, base metals except
international markets rose by 1.8 percent and
Nickel traded on a negative note in line with
closed at $16.43/oz. On the MCX, silver prices
international trends. Base metal market had
rose by 3.82 percent and closed at Rs.37935/kg.
experienced the reversed its inventory level at
"This week, gold may inch marginally higher
LME as it rose around 30150 MT last week while
towards $1,200 as the weak U.S. labor report
the cancelled warrants slumped by 45400 MT,
should lend support to continued low interest
indicating a negative cue for the metal. The
rates in the United States," said Howie Lee,
contango for the metal further swelled to $29.5
an analyst at Phillip Futures. The revisions to
this week from $7 MT, further speaking about
the March payroll numbers were particularly
the underlying negativity in the metal. From
worrying and should support gold's rally, he said.
the premiums perspective as well, Midwest US
Traders pared bets the Fed would move to
premiums fell drastically this week from $334 to
raise rates by the end of the year, seeing only a
$319 MT, indicating that the supply is likely to
51 percent chance that the first increase would
outpace the demand as the usage remains tepid.
come in December. Other aspects of the job
Copper three months forward contract
report sent mixed signals and kept investors
maintained a flattish trade during this week with
on edge. The unemployment rate dropped to
prices ranging close to the previous week’s close
a near-seven-year low, suggesting underlying
of $6387.5 MT, down by around 0.2%. As the
strength in the economy at the start of the
investors awaited the trade balance data from
second quarter that could keep alive prospects
China which would help in forming a firmer trade
of a rate rise later this year, capping gains in
in the metal. LME Copper prices fell by 0.2 percent
gold. As the uncertainties was reflected the
last week as reduced buying of spot copper
holdings in SPDR Gold Trust, the top gold-
in China was cutting import demand, forcing
backed exchange-traded fund, saw the sharpest
Chinese and foreign trading houses to keep lower
decline this year on Friday. Speculators had cut
inventories in bonded warehouses in China.
their bullish gold bets for the first time in four
weeks in the week ended May 5.
As per the trade balance data released today,
China’s copper imports rose to the highest in a
Bullion's gains were also capped by a rally in
year as tighter scrap supply forces fabricators
Asian equities, which were boosted by China's
to use more refined metal and as demand rises
latest cut in interest rates to bolster its economy.
seasonally. Aluminium three months forwards
Base Metal
contract settled lower at $ 1888, down by $25
from the previous week’s closing price of $1913.
Base metal prices traded lower during last
Nickel three month forward contract continued
week excluding Nickel and Zinc as investors
to straddle on the winning horse this week as
ignored sharp gains witnessed as outpacing the
well, settling at $14300 MT, up by around 4%
supply and demand fundamentals. However,
from its previous week’s close.
weakness in the DX along with mounted
Other factors pointing to a strong resurgence
expectations of stimulus from China following
in zinc prices, including dropping stockpiles are
weak economic data from the nation restricted
the planned zinc production mine closures,
4
Monday 11, May 2015
Daily
which makes a strong case for potential
a cause of concern. On the other hand, stronger
sustainable upward momentum for zinc.
dollar will exert downside pressure on oil prices.
Energy Market
News & Report
Analysis
as on May 08, 2015
Market Highlights - Crude Oil (% change)
Crude Oil
Unit
Last Prev.
day
WoW
MoM
YoY
Brent (Spot)
$/bbl
63.5
-1.9
-0.7
13.0 -41.8
Nymex Crude
(June’ 15)
$/bbl
58.9
-3.3
-0.4
16.9 -41.2
ICE Brent Crude
(June’ 15)
$/bbl
65.4
-0.2
-1.6
17.7 -38.9
MCX Crude
(May ’15)
Rs/bbl
3796.0
0.2
1.1
19.3 -36.8
ANZ slashes iron ore price
outlook
Source: Angel Broking
NYMEX
Oil
prices
traded
higher
for
consecutive fourth week in a row as U.S.
crude inventories fell almost 4 million barrels
last week, their first weekly decline since
ANZ has cut iron ore price forecasts for the
January, and government data showed on
next two years as a result of expanded low-cost
Wednesday. But crude stockpiles still stood at
supply and flat demand. The bank says iron ore
a discouragingly-high 487 million barrels. While
will average $US55 a tonne in 2016, down $US5
weekly demand for gasoline was higher, stocks
a tonne on earlier predictions. In 2017, ANZ
of the fuel also rose despite the approach of the
expects iron ore will fetch an average of $US60 a
peak U.S. driving season. Prices rise was aided
tonne, down $US3 a tonne. For the rest of 2015,
by a disruption in Libyan crude exports, higher
the iron ore price is expected to average $US56
selling prices for Saudi oil and a weaker dollar
a tonne. An oversupply of the commodity and
that tends to inflate commodity prices.
slow growth out of China worked to push the
Since April's price rally of between 20 percent
and 25 percent, oil bulls have been pushing the
price of iron ore to a record low of $US46.70
tonne on April 2.
market up on the notion that a supply glut was
Since then, the price has recovered to around
easing from tightening world production despite
$US56 a tonne after announcements from two
continuous builds in U.S. crude stockpiles. Last
of the world’s biggest producers – BHP Billiton
week, WTI oil prices in the international markets
and Vale – that they would cut output. But ANZ’s
rose by 0.41 percent and closed at $59.39/bbl.
head of commodity research Mark Pervan said
On the MCX, crude prices rose by 1.12 percent
the cuts would not work to usher in a price rise.
and closed at Rs.3796/bbl. During this week, oil
"Despite this, we feel fundamentals still look
prices to trade lower as crude inventories in the
weak. Steel prices have only shown a mildly
US remains at discouragingly high levels while
positive response, and low-cost iron ore supply
disruption in Libyan crude oil exports remains
continues to expand,” Pervan said.
5
Monday 11, May 2015
Daily
PM Modi dedicates modernized and expanded
IISCO plant to the nation
Prime Minister Narendra Modi on Sunday
and touched upon the need for Centre-state
dedicated the modernised and expanded IISCo
cooperation. "Unity is our strength," she said,
Steel Plant of Steel Authority of India to the
putting behind her the previous reluctance to
nation, at a function in Burnpur that showed
work with the Modi government. "The country
clear indications of improving relations between
will remain together only if development and
the Centre and the West Bengal government.
politics go hand in hand. Bengal was No. 1 in
SAIL, which spent Rs 16,000 crore to expand
terms of industry. We will have to infuse a new
the plant's capacity to 2.9 million tonne per annum
life to industry to revive it," she said. The CM
from 0.85 million tonne, said it would make fresh
delivered her speech in Hindi - not in Bangla - in
investments of more than Rs 40,000 crore by 2025
what marked yet another friendly gesture.
to expand its two steel units in the state. This
Taking a cue, Modi hit the ground running.
investment will be part of its plan to more than
Adding oratory skills to highlight the new glow
double overall capacity to 50 million tonne.
in Centre-state relations, he said: "It is not about
an
iisco or usko (for this person or that person), but
unprecedented show of bonhomie between two
about Sabko (everyone) ... We have to put the
popular leaders - PM Modi and West Bengal Chief
nation before politics."
The
occasion
was
marked
by
Minister Mamata Banerjee - with each vowing to
work together on development issues.
Banerjee was the first to speak at the event
Referring the IISCo plant, Modi said: "A sick
unit has bounced back to life and India's steel
sector has progressed due to the joint effort by
6
Daily
the Centre and the state."
Monday 11, May 2015
Plant to 9.0 million tonne from the present 2.2
The PM thanked Banerjee for her Trinamool
million tonne and Rs 17,000 crore to increase
Congress' support to a number of government
IISCo's capacity to 5.6 million tonnes from 2.9
Bills in Parliament. He said one of the growing
million tonne.
accomplishments of his one year in office was
In addition, Rs 1,500 crore would be spent to
a complete change in Centre-state relations,
set up a 0.5 million tonne facility at Durgapur in
which he said were earlier filled with tension.
an equally owned joint venture with Japanese
The PM linked his government's overall
manufacturer Kobe Steel. The iron ore nugget
development agenda to development of the
plant will be the second of its kind in the world -
eastern states like Bengal, Odisha, Assam
the other is Kobe's pilot plant at Minnesota, US.
and the Northeast, which he said had been
SAIL is set to sign an agreement with Kobe for
neglected compared to the western region.
the project. The state-run company is also set
Apart from Second green revolution, the east,
to commission a railway wagon making unit at
he said, had enough fertile land with water to
Kulti near Burnpur in the next six-seven months,
feed the population. He also highlighted his
Verma added.
three-pronged economic policy which relies
Rio’s coal boss says a price
recovery is years away
on harnessing productivity of farm land, value
addition of mineral resources and tapping the
skills of youth and people resources.
Modi arrived in the steel township of
Burnpur near Asansol on Sunday morning from
Kolkata and drove straight to the IISCo plant to
visit the country's largest blast furnace, Kalyani.
The recently commissioned furnace, with 4,160
cubic metre capacity, marks the resurgence of
Bengal's key industrial belt of Asansol-Durgapur
and one of the country's earliest steel plants.
IISCo was once the bluest of blue-chip
companies and its shares were traded on the
London Stock Exchange in the 1960s. It was
taken over by the government in 1972 and made
a unit of SAIL in 1978 as part of a nationalisation
drive. Speaking at the event, Union Steel and
Mines Minister Narendra Singh Tomar said SAIL
would raise its capacity to 50 million tonne by
2025 at an investment of Rs 1.5 lakh crore.
Sharing his company's plans for the state,
SAIL Chairman CS Verma said it would spend
Rs 25,000 to expand capacity of Durgapur Steel
Rio Tinto’s newly appointed coal boss says it
will be a long time before the thermal coal price
recovers. Jean-Sébastien Jacques was named
as Rio’s new coal boss in February when the
company revealed plans to condense its assets
into four product groups as part of a major
restructure in an effort to rein in costs.
Jacques says his main priority since taking
over the job from Harry Kenyon-Slaney was to
ensure Rio’s coal mines remained free-cash-flowpositivein what he called “a very challenging
environment”. The depressed thermal coal
MARKET is currently trading at six-year lows
of around $US63 a tonne, a far cry from the
$US150 a tonne the commodity was fetching
in 2011. Jacques predicts it will be some years
before a substantial price rise is seen. "In coal we
have to be ready that we have multiple years, it
could be even three or four years, before we see
an inflection point," Jacques told The Australian
Financial Review.
7
Daily
Japan, EU piqued over India’s
‘safeguard’ probes on steel
imports
EU and Japan have criticised India for
“frequent and frivolous” use of safeguard
measures — imposition of higher duties to
protect domestic industry against import
surges — and have asked New Delhi to review
countries
by countries at a recent meeting of the WTO’s
Committee on Safeguards, India accounted for
five, but later dropped two.
In 2014, too, safeguard investigations
initiated by India were one of the highest at 14.
Japan, the EU and Russia expressed concerns
about
India’s
safeguard
investigation
on
seamless pipes, tubes and hollow profiles of
iron or non-alloy steel, arguing that imports had
its use of the tool.
The
8
Monday 11, May 2015
also
questioned
India’s
recent safeguard investigation on certain steel
products, in a recent meeting of the WTO’s
Committee on Safeguards.
“The EU has alleged that many of the
investigations have been initiated on weak
grounds and asked India to review its use of
safeguard measures,” an official who attended
the meeting said.
Of the total 30 safeguard actions notified
not surged.
India, in its defence, said that while imports
had decreased, they were still sufficiently
high compared to the base year. A number
of members, including the US and China, are
affected by duties on steel products.
Safeguard duties, which are basically levies
in addition to the existing import duties, can
be imposed on items that witness a surge in
imports, thereby hurting the domestic industry.
Daily
of auction of composite licence. The concept of
Centre open to changing
rules for advance green
clearance
The
9
Monday 11, May 2015
Union
government
is
open
composite licence - a prospecting licence (PL)
-cum- ML for an area where there is inadequate
to
changing the rules where states have to
obtain a conditional clearance under the
Forest (Conservation) Act, 1980, and Wild Life
(Protection) Act, 1972, before auctioning a
mining licence (ML) or composite licence.
Moreover, the Centre is likely to reserve the
end-use of composite licence auction for the
non-coal minerals if state governments ask for
it. "We are willing to reserve the end-use of the
composite licence auction but only if states
demand it," said a senior official, who did not
wish to be named.
evidence of mineral contents - was introduced
for the first time in the MMDRA Act.
A reconnaissance permit (RP) is granted
for preliminary prospecting through regional,
aerial, geophysical or geochemical surveys
and geological mapping. A PL is granted
for exploring, locating and proving mineral
deposits. An ML is required finally to extract
minerals.
Senco Gold rides on Piku
range, plans expansion
Kolkata-headquartered
Senco
Gold
&
Diamonds seems well set to thrive on its
According to the recently introduced
association with the Amitabh Bachchan-starrer
mineral auction rules - made according to
Piku. The Rs 1,400-crore jewellery company has
the Mines and Minerals (Development and
come up with an exclusive gold jewellery range
Regulation) Amendment (MMDRA) Act, 2015
christened the ‘Piku Collection from Senco Gold
- a state government will need to obtain
& Diamonds’.
a conditional clearance "on the basis of
Senco Gold & Diamonds incidentally is the
recommendation of the committee constituted
jewellery partner of the well-received Bollywood
for the purposes of forest clearance under the
film, which revolves around a modern Indian
Forest (Conservation) Act, 1980, and wildlife
woman who is committed to her values and yet
clearance under the Wild Life (Protection)
contemporary.
Act, 1972, or any other law for the time being
“The range is specially designed for modern
in force, so as to enable commencement of
women and is chic, classy with a touch of classic
operations (auction)".
ethnicity, top Senco officials said.
State governments have opposed this ,
The Piku range boasts 10 to 12 new designs
saying it is ultimately the responsibility of the
of gold jewellery with and without kundan.
company to obtain such clearances before
Priced between Rs 50,000 and Rs 2,00,000,
auction of any ML or composite licence.
the collection will be made available across all
Moreover, according to the proposed rules,
Senco Gold & Diamond outlets in different cities
a state "may in its discretion identify a specific
of India. The company, at present, has 63 outlets
end-use" as a prerequisite for auction of mining
and plans to have 100 outlets across the country
licence (ML) only.
by 2018.
However, no such discretionary powers
have been given to state governments in case
“We have always kept in mind consumer
Daily
Monday 11, May 2015
10
demands and the change in market trends with
collection represents a blend of rare elegance
regards to our design and pricing and moved
and contemporary designs made by Bengal’s
ahead accordingly. Modern, contemporary
most famed craftsmen.”
designer jewellery is the preference of many
The company has also drawn up plans to
women, and there are many occasions that call
invest Rs 350 crore over the next three years
for contemporary jewellery,” said Shankar Sen,
to emerge as one of the top three jewellery
CMD, Senco Gold & Diamonds.
retailers in the country in terms of footprint. The
He added: “We have designed the Piku
company has already raised Rs 80 crore from
collection specially keeping in mind the current
SAIF Partners through an equity dilution of 20
fashion trends. The collection has a distinctive
per cent. It will mobilise the remaining funds
touch of authenticity and trendiness to it. The
through debt and internal accruals.