Go short on MCX copper
Copper futures traded on the Multi Commodity Exchange (MCX) witnessed a bullish break out above ₹390/kg last week as expected. The contract has surged over 8 per cent last week breaking and decisively closing above the psychological level of ₹400. However, this rally has paused this week and the contract has been range-bound between ₹410 and ₹418. It is currently trading at the mid-point of this range at ₹414.
The immediate outlook is not clear. A break out on either side of the range ₹410-418 will decide the next leg of move for the contract. A break below ₹410 would trigger a fall to ₹407 immediately and then to ₹400. On the other hand, a strong break above ₹418 can take the contract further higher to ₹422.
Given that the contract had witnessed a sharp rally in a short span of time last week, the possibility is high for a corrective fall in the coming days before the overall uptrend resumes. Having said this, the near-term bias is bearish to see a break and fall below ₹410 towards ₹407 and ₹400. Traders can go short on a break below ₹410 with a stop-loss at ₹413 for the target of ₹403. However, the overall uptrend that has been in place since February remains intact. So a break and fall below ₹400 looks unlikely. As such the uptrend can resume again from ₹400 levels.
Cement demand likely to grow by 7% during FY16: ICRA
Riding high on the improvement in infrastructure, investment cycle and overall economy, the demand for cement is likely to grow by nearly 6.5—7 per cent during FY16, rating agency ICRA said.
Cement demand is likely to improve gradually in the medium term in line with the recovery in infrastructure, investment cycle and overall economy, it said.
ICRA expects demand to grow by 6.5—7 per cent during FY16 and the pace of recovery in cement industry is likely to mirror the trends in economic recovery.
The cement capacity utilisation is likely to remain moderate at 72 per cent given the capacity overhang, but it is likely to improve to 77 per cent in FY17 driven by both pick—up in demand as well as slowdown in new capacity addition, it said.
All India cement production grew by 5.6 per cent in FY15 as compared to 3 per cent in FY14.
While pre—election spending and delayed monsoon had supported the growth in cement demand in the first half of FY15, the growth slowed down in H2 FY15 once the election cycle was over, ICRA senior vice—president Sabyasachi Majumdar said.
“Cement demand was also impacted by cut down in government spending during January—March 2015 quarter, muted demand from real estate and construction projects and slow recovery in infrastructure spending,” he said.
Further, decline in kharif crops production owing to poor monsoons affected agricultural incomes and post—monsoon rural demand for cement for housing and other purposes, he said, adding that “regional factors such as extension of monsoon in south, extremely cold weather and unseasonal rains in north in Q4 FY15 also affected construction activities and consequently cement demand in some areas.”
According to ICRA, the profitability margins of most cement companies contracted on a quarter—on—quarter basis post monsoons due to pressure on realisations. As per ICRA estimates, the operating margins declined from 15.4 per cent in Q2 FY15 to 14.1 per cent in Q3 FY15.
“The profitability and debt protection metrics are likely to improve in FY16 but will continue to remain subdued.
Pick—up in infrastructure projects and overall investment cycle as well as improved pricing power are likely to remain the key triggers for the sector over the near—term,” he said.
Paradip Port achieves two coal loading records
The Mechanised Coal Handling Plant (MCHP) of Paradip Port has achieved two records in thermal coal loading on May 3, 2015, onto the vessels MV JS POTOMAC and MV E R BILBAO.
A record quantity of 41,000 tonnes of thermal coal was loaded in a shift of 8 hours, surpassing the previous record of 40,751 tonnes loaded way back on October 21, 2006. Also, a record quantity of 1,07,268 tonnes of thermal coal was loaded on the same day, surpassing the previous record of 1,00,127 tonnes on January 31, 2015.
In the process, the plant achieved a loading rate of 3,170 tonnes per hour (tph) against the rate of 3,000 tph asked for by the vessels, the release highlighted.
Mr M. T. Krishna Babu, IAS, Chairman of PPT, and Mr N. Vaiyapuri, Deputy Chairman, expressed their happiness on the achievement and congratulated the officers, employees and workers of the Port as well as the stakeholders, the release pointed out.
Pact signed to form JV for coal transportation in Odisha
THE Coal Ministry recently signed an agreement for a joint venture (JV) with the Railway Ministry and the Odisha government to lay railway tracks for coal transportation from coal blocks in the state.
Rail lines, including six corridors, would accordingly be developed by the Ministries and the state government through their respective public sector units at an estimated cost of Rs 2,300 crore.
“We can leverage the balance sheet of Coal India for this joint venture to execute the projects. It will help the PSU increase its profits and production as it is a pure profit venture,” the Minister of Power and Coal, Mr Piyush Goyal, said. As for the Railways, the Ministry will get additional lines that can be used to carry other freight and passenger services.
According to Mr Goyal, the Odisha government would earn revenue for every kg of coal that is mined and transported through these lines.
The Coal Ministry, through its PSU, will have 64 per cent stake in the JV, while the Railways would have 26 per cent equity and the state government the rest.
The JV will ink separate, project-specific concession agreements with the Railway Ministry. The scope of the JV includes land acquisition, funding, rehabilitation and project implementation.
This post was written by Atlantic Admin