Dec 12, 2001|
Non-ferrous: Betting on '02 recovery
Since the lows in November '01, copper prices on the London Metal Exchange (LME) are trading higher by 10.9%. Prices had rocketed to $1,540 / tonne but have seen a correction to 1,463 / tonne. Reflecting a similar mood are base metal stocks, Sterlite Industries Ltd. (SIL) and Indo-Gulf Fertilisers, which have gained 47.2% and 39% respectively from their September '01 lows.
As per reports, domestic demand for the base metal is expected to grow between 8%-10%, which has been the historical growth rate. Copper consumption in FY01 was estimated to be 300,000 tonnes. This is expected to rise to 325,000 tonnes in the current year. Among the key consuming industries are jelly filled telecom cables (JFTC) & cable wires, which account for 55% of total consumption. The shift towards optical cables could undermine the demand for JFTC in the future. The largest buyers of JFTC in the country are Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL). Both are moving towards upgrading their networks to optic fibre. However, the JFTC industry argues that the last mile is likely to remain linked by copper cables. Considering telephony penetration in India, the industry opines that, there is no significant threat to demand from the telecom industry.
Domestic supply of the base metal has been on the rise over the past few years with two smelters coming onstream, Sterlite Industries and Indo Gulf Corporation. Both these companies had targeted augmenting capacity from 100,000 tonnes per annum (TPA) to 150,000 TPA in the current fiscal. The increase in domestic production has steadily eaten into imports, which are expected to further reduce in the current fiscal.
Although markets are expecting a turnaround in the global economy much of the run in copper prices seems to have built in the improved business sentiment. The downside risk is likely to have increased as any delay in recovery could impact commodity prices. That said, markets opine, 2003 is likely to be the year for sustained recovery in business.
More Views on News
Jun 14, 2017
Should you subscribe to the IPO of Tejas Networks Ltd?
May 26, 2017
Don't be surprised to come across some Super Investors there!
May 19, 2017
Not all small-cap investors see themselves as traders. Some see themselves as business owners.
Jul 31, 2017
Should you subscribe to the IPO of Securities & Intelligence Services Ltd?
Jul 8, 2017
If Super Investors can wait for the right pitch, so can you.
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407