Tag: commodity

Commodity Champions | 2022 was a year of uncertainty — 2023 is no less, says Vandana Hari

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The three-day India Energy Week was the first major event under India’s G20 presidency. The aim was to create strategies to deliver a multi-faceted energy system and making energy accessible among others.

According to Vandana Hari of Vanda Insights, the past year has been filled with uncertainty and unpredictability in the oil market — 2022 was a rollercoaster of ups and downs in terms of oil prices, and it seems that 2023 is no less uncertain.

Hari believes that oil prices will continue to react to the global market sentiment. The events and news that shape the global economy will continue to impact the oil market, causing prices to fluctuate.

OPEC+ and the oil markets are in a wait and watch mode with respect to China. The impact that China has on the global economy is significant, and its decisions will continue to affect the oil market. As a result, the oil markets are keeping a close eye on China’s actions.

Despite the uncertainty in the market, Hari doesn’t expect crude prices to reach $100 per barrel. She believes that the market will remain relatively stable, with fluctuations in prices based on global events and news.

Read Here | Oil prices jump more than 2% on Russian plan to cut output

Finally, Hari warns that we may see a drop in demand from global economies. The global economy is still recovering from the pandemic, and there is a chance that we may see a decrease in demand for oil in the coming months.

In conclusion, the oil market continues to be uncertain and unpredictable, with prices continuing to react to global market sentiment. The impact of China and the state of the global economy will continue to shape the market, and it’s important for players in the industry to stay vigilant.

Sandeep Kashyap, COO of the ACME Group, sees green hydrogen and ammonia receiving higher investments. He also believes India has the capability to run green plants on a 24X7 basis.

Abhishek Kar, Sr Programme Lead, CEEW; Saurabh Singh, APAC and India Head – Energy, Kearney; and S Ravi Shankar, Director and CEO, Shapoorji Pallonji Energy, also shared their thoughts.

For more details, watch the accompanying video

Also Read | Budget 2023 | Bring down commodities exchange transaction cost, say experts

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

China’s growth may slow to 4% this year, but its supply chains are intact: Experts

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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China took around 45-57 percent of global consumption in base metals and continues to be the world’s biggest refiner of metals, accounting between 35 percent and 55 percent of total global production in 2021, according to Nicolas Aguzin, CEO of the Hong Kong Exchanges and Clearing (HKEX), owner of the LME since 2012. He was speaking at an LME seminar on metals. This explains why a slowdown in China can be both recessionary and inflationary for the global economy.

There is no doubt that China is slowing as its Q2 (April-June) GDP was up only 0.4 percent YoY, versus forecasts of 1 percent. The GDP is down from Q1 growth of 4.8 percent; what’s worse in Q2 is that it showed a sharp QoQ contraction of 2.6 percent against an estimate of 1.5 percent contraction. In 1H CY2022, China’s GDP grew 2.5 percent and analysts are deeply sceptical of the country achieving the full-year GDP growth target of 5.5 percent.

CNBC-TV18 spoke to two experts to understand how much is China slowing: Ben Cavender, managing director of China Market Research Group, and Dan Wang, chief economist at Hang Seng Bank, China.

Also Read: Uncertainty and chaos: Medical students left in the lurch want speedy norms from National Medical Commission

Wang said China’s supply chains are still robust and despite intermittent COVID-related work stoppages, port activity in China has returned to pre-April levels, especially in the Shanghai ports. She doesn’t anticipate COVID-19 controls to impact exports out of China. Indeed exports have beaten estimates, she said. However, domestic production and productivity have declined she said, adding that she expects the overall economy to deliver a 4 percent growth this year.

Cavender was more bearish, “We will see some improvement in the back half of the year, but my concern is that it is not going to be quite as strong as maybe a lot of traders or investors might be looking to see. The government is going to take steps to try and increase spending on infrastructure projects and construction and that should help to some extent, but I think overall, we are talking about a fairly weak consumer market.”

“It’s totally unrealistic to think that we are going to see anything like the 5.5 percent that was originally forecast, I think we would be happy getting out of this year, seeing total growth for the year at anywhere above 3 percent,” he added.

Also Read: Sri Lanka, Rajapaksas and China — A cautionary tale

Cavender pointed out that it’s not realistic to expect China to continue to deliver a 7 percent growth given the base has grown huge. But he said the world won’t be able to do without China and it will continue to account for over 40 percent of the world’s commodities like refined metals. He also pointed out that, unlike other large economies, China’s central bank has the leeway to drop rates and loosen the monetary policy. Others have argued that it is tough for the PBOC to be dovish and cut rates as the series of rate hikes in the US will mean capital will rush out of China.

Both economists see two immediate problems: one is the intermitted harsh lockdowns that create uncertainty and two is the deep slump in the property sector.

“China’s demand for input of the commodity will probably stay relatively weak compared to what happened to China last year and the main reason for that is the economic slowdown, of course, but the most important reason is the weakness in the property market,” Wang said. “It has been the biggest hole for China’s growth in the first half of the year. And we don’t anticipate it to recover much in the second half,” she added.

Also Read: Chinese regulator asks banks to step up loans to developers amid mortgage-boycott crisis

Recently, many homebuyers have protested publicly and refused to pay their mortgages on yet-to-be delivered homes. Cavender said the unwillingness to pay mortgages points to a larger problem. Many developers in China don’t have the funds to finish pre-sold projects, after the government, since mid-2021 has forced realty companies to pare down debt. The Chinese government has tried to appease consumers, said Cavender by forcing local bodies and banks to provide loans to real estate companies with high retain exposure.

Wang said she doesn’t expect the property market to revive in the second half and that was the reason for her GDP downgrade to 4 percent this year. But she said loan defaults in the Chinese home loan market are only 1 percent, hence the protests won’t precipitate an already tough situation.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Oil prices drop on profit-taking as supply fears linger

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Oil prices slipped on Monday, giving up earlier gains as investors took profits after a surge in the previous session, but global supply fears loomed with the European Union preparing to phase in a ban on imports from Russia.

Brent crude futures were down 64 cents, or 0.6 percent, at $110.91 a barrel at 0137 GMT, while US West Texas Intermediate (WTI) crude futures dropped 60 cents, or 0.5 percent, to $109.89 a barrel.

Both benchmarks, which jumped about 4 percent last Friday, earlier increased by more than $1 a barrel, with WTI reaching its highest since March 28 of $111.71.

“Oil markets are expected to gain this week as a pending ban by the European Union on Russian oil will further tighten global supplies of crude and fuels,” said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.

The EU still aims to agree a phased embargo on Russia oil this month despite concerns about supply in eastern Europe, four diplomats and officials said on Friday, rejecting suggestions of a delay or watering down proposals.

Also Read: Steel prices ease over 10%, coal crisis playing havoc on secondary steelmakers

Last week, Moscow – which calls its actions in Ukraine “a special military operation” – slapped sanctions on several European energy companies, causing worries about supplies.

Meanwhile, US gasoline futures set a fresh all-time high again on Monday as falling stockpiles fuelled supply concerns.

“Oil prices remained bullish, especially WTI’s near-term contract, as US gasoline prices continued to rise amid weaker imports of petroleum products from Europe,” Fujitomi Securities’ Saito said.

On the supply side, US energy firms in the week to May 13 added oil and natural gas rigs for an eighth week in a row as high prices and prodding by the federal government prompted drillers to return to the wellpad.

Elsewhere OPEC+ – the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia – has been undershooting previously agreed plans for output increases due to under-investment in oilfields in some OPEC members and, more recently, losses in Russian output.

Also Read: Gold prices up from 3-month lows as dollar surge slows

The latest monthly report from OPEC showed its output in April rose by 153,000 barrels per day (bpd) to 28.65 million bpd, lagging the 254,000 bpd rise that OPEC is allowed under the OPEC+ deal.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Sebi tweaks exercise mechanism of options on commodity futures

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Capital markets regulator Sebi on Monday tweaked the “exercise mechanism” of option contracts on commodity futures. The decision has been taken based on feedback received from stock exchanges and the recommendations of Commodity Derivatives Advisory Committee of Sebi.

In a circular, Sebi said the prescribed mechanism will be adopted by exchanges for exercise of the options contracts on expiry. Under the mechanism, Sebi said All In the Money (ITM) option contracts will be exercised automatically, unless ‘contrary instruction’ has been given by long position holders of such contracts for not doing so.

Also Read: Asian stock markets trade higher despite worries of Omicron spread

Besides, All Out of the Money (OTM) option contracts shall expire worthless, it added. All exercised contracts within an option series shall be assigned to short positions in that series in a fair and non-preferential manner, the regulator said.

Also Read: Apple becomes first company to hit $3 trillion market value, then slips

The new framework will be effective from the date of new series of commodity derivatives launched on or after February 1, 2022, the Securities and Exchange Board of India (Sebi) said.

Also Read: US stock markets closing: How S&P 500, Dow Jones, Nasdaq, Russell 2000 fared on Monday

In June 2017, the regulator permitted commodity derivatives exchanges to introduce trading in options on commodity futures and stipulated guidelines with regard to the product design and risk management framework to be adopted for trading in options on commodity futures.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

White goods makers hike prices for third time this year amid surging input costs

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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To beat the impact of rising commodity prices, white good makers have hiked prices for the third time this year. According to industry experts, manufacturers may hike prices once again in the new year, Business Standard reported.

White goods are major household appliances such as air conditioners, washing machines, televisions and refrigerators.

Most companies are likely to raise prices in the range of 5-8 percent, Eric Braganza, president of the Consumer Electronics and Appliances Manufacturers Association and Haier Appliances India, told Business Standard, adding that some manufacturers have already passed on the burden to the consumers through price hikes.

Despite hiking prices by about 12-13 percent earlier this year, consumer durable companies were unable to fully cover the increase in costs.

Commodity costs have gone up by about 20 percent in 2021, while the price increase in products was limited to 12-13 percent only so far, the report quoted Kamal Nandi, business head and executive vice-president at Godrej Appliances, as saying.

“There is still a gap of about 6-8 percent between commodity prices and the price increases that we have taken as an industry,” Nandi said.

Godrej Appliances, which has already increased prices by 3-4 percent in December, is planning another round of hike next month on refrigerators, washing machines, and air conditioners.

Nandi said the company avoided increasing prices during the festive season as it would dampen demand.

Television maker Super Plastronics, which manufactures the Thompson brand of televisions, will raise prices by 5-7 percent in January if component shortage continues.

Although prices of raw materials such as steel, aluminium, copper and crude oil have come down by up to 15 percent since October, they still are at higher levels. Between January and October, prices of these commodities had risen sharply between 25 and 140 percent.

Meanwhile, consumer durable manufacturers fear the spread of the Omicron variant of Coronavirus could disrupt the supply chain and impact component supply.

“We are not faced with any issue so far. We were stocking up on 15 days of components but now we have increased it to 45 days,” Nandi told Business Standard.

Till now, consumers have absorbed the price increases, but consumer durable companies will have to adopt a cautious approach while planning further price increases, said experts.

“Moderation of competitive intensity in coming months is key as it is critical for potential price hikes, and thus better profitability for the entire industry,” Moneycontrol quoted brokerage firm Emkay as saying.

The price hikes in the last nine months of this financial year and the improvement in demand will likely contribute to an 8-10 percent revenue growth in the December quarter, Moneycontrol reported.

Meanwhile, a Crisil report earlier this month said manufacturers of consumer durables are likely to see a 20 percent growth in revenue this fiscal, Mint reported. Last fiscal, the sector, which includes consumer electricals (excluding mobile phones) and white goods, clocked a revenue of Rs 2 trillion.

Positive consumer sentiment and higher realisations will boost growth momentum this fiscal and lead to 14-15 percent revenue growth for white goods, the report said.

Read Also | Supply chain crisis: Panic ordering by retailers worsening situation, impeding global growth

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Dixon Tech bets on healthy orderbook; targets Rs 17,000-17,500 cr revenue in FY23

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Taiwanese IT hardware firm Acer has roped in domestic electronic manufacturing services firm Dixon Technologies for making its laptops in India, both companies said in a joint statement on Wednesday. The facility will have a capacity to manufacture up to 5 lakh Acer laptops annually.

Dixon Technologies is one of the contract manufacturers that has qualified for the PLI scheme for IT hardware.

In an interview with CNBC-TV, Atul Lall, MD of Dixon Technologies India, discussed the tie-up with Acer and the company’s outlook.

Read More: Dixon Technologies surges in trade, here’s why

He said, “It is a big step for us. We are one of the beneficiaries of the PLI scheme of IT hardware. Under this scheme, we have tied up with Acer which undoubtedly is an iconic brand. So, we have started manufacturing the laptops for Acer.”

On revenues, Lall said, “The revenue targets in this case are Rs 300 crore, Rs 600 crore, Rs 1,600 crore and Rs 2,400 crore. So I feel in year one, we should be able to achieve the minimum threshold of Rs 50 crore but from year two onwards, the upward ceiling described in PLI scheme of Rs 600 crore, Rs 1,600 crore, and Rs 2,400 crore, we should be able to achieve.”

As far as capex is concerned, their assets are fungible as prescribed under the PLI scheme- it would be almost 20 crore, Lall shared.

He mentioned that the company is targeting revenues in the range of Rs 17,000-17,500 crore in the next fiscal.

On orderbook, he said, “On mobile, we have a very healthy orderbook and we are confident of surpassing the upward ceiling under the PLI scheme. The new vertical of laptops, we are also going to kick in our telecom branch in which we have a JV with Bharti for IoT devices. Then, we are also launching monitors, LED ones which is going to happen in the next quarter.”

Lall added, “Then there is going to be growth in each one of our verticals. We have just inaugurated a fully automatic top loading washing machine plant in which we have a strategic tie-up with Bosch. So, across all verticals, there are triggers, these new verticals are going to help us achieve this number.”

On raw material price pressures, he said, “Undoubtedly there has been a pressure because of the commodity price increase and there is a certain lag in passing on the price increase to our principals. Lately, however, I am seeing that both on the commodity pricing side and also on the fare side, there is some kind of softening. So in the short-term, there will be pressure on margins, but I think over a period of time, we should be able to pass it on to our principals.”

(With text inputs from PTI)

For full management commentary, watch the video.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

CDAC gives nod for foreign entities to invest in commodity derivatives

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Securities and Exchange Board of India (SEBI)-appointed Commodity Derivative Advisory Committee (CDAC) held a meeting on November 15, where two important points were discussed. One, the recent bans on a couple of agricultural commodities and the impact of that on the market’s credibility and institutional participation. The second, and a more important one, was on a proposal to allow eligible foreign entities to invest in the commodity derivatives market. CDAC aims at development of the commodities market and to deepen the commodities market sphere.

“In 2016, in the CDAC meeting, we all decided that there should be participation by institutional players so that our markets deepen and there is more participation by all kinds of participants,” Narinder Wadhwa, president of Commodity Participants Association of India (CPAI), said in an interview to CNBC-TV18.

Also Read: Commodity supercycle ahead? Experts decode outlook for Samvat 2078

On FPIs, he said, “There was a discussion between the stakeholders that more institutional participants like FPIs, banks, pension funds, and insurance companies should also be allowed to participate in the market. So, the discussion was around allowing more institutional players into the market and in this FPIs are the major participants.”

“As a participant, we put out our view that we are in favour of having FPIs in the market, definitely with certain restrictions, and most of the members were of the same view. I hope that this approval in the CDAC will go through and it will be put up at the next board meeting of SEBI,” said Wadhwa.

For the entire interview, watch the video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Hindalco Q2: Expect EBITDA/t to hold steady in Q3; LME aluminium at around $2,700/t, says management

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Hindalco expects EBITDA per tonne to hold steady in Q3, Satish Pai, managing director, told CNBC-TV18.

Aditya Birla group company Hindalco Industries reported a consolidated net profit of Rs 3,417 crore for the quarter ended September. The Mumbai-based metal company had reported a net profit of Rs 387 crore for the corresponding period a year ago.

Its consolidated revenue came in at Rs 47,665 crore for the three months to September 30, an increase of 52.6 percent on a year-on-year basis.

Also Read: Hindalco Q2 Results: Net profit increases 9 times to Rs 3,417 crore, revenue up 53%

“We believe that the London Metal Exchange (LME) will stay firm going forward because the supply and demand of aluminium are tight; the world is in a deficit of about 0.9 million tonne. So, the LME prices should hold. Cost inflation, Q2 to Q3 will be there. So a certain amount of cost inflation will come in, but EBITDA per tonne and margins for the business will be healthy going forward,” Pai said.

On aluminium price, he said, “LME had hit around USD 3,000 per tonne and currently it’s trading at about USD 2,650. So, I believe that the current range will be around USD 2,700 and we will have to see how it performs, but the EBITDA per tonne is going to remain above USD 1,000 per tonne; I cannot give a more exact number than that.”

Also Read: Aluminium and zinc expected to outperform in last quarter of this year; here’s why

However, said Pai, aluminium EBITDA should be at around USD 1,300 per tonne range.

Also, Hindalco is looking at paying a Rs 6,000 crore bond which is due, rather than refinancing it.

For the entire management interview, watch the video.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow