Aluminium has been the worst performer among base metals in 2009 and investors will never forget the setback they suffered by putting their money in aluminium in the previous year. But, there is no guarantee that the scenario will remain the same in 2010.
But, like any other base metal, China holds the key to the aluminium prices. If Chinese demand soars the prices will climb up and India’s aluminium producers are set to cash in on that.
Long term prospect of aluminium is bright as China is still in the middle of completing urbanization and its metal intensive growth is likely to continue for many years to come.
About 65% of aluminium consumption is in the east and middle south China. The urbanization of North West and south west has great potential for aluminium demand in the coming years.
In the short term, overcapacity, plenty of inventories and reopening of smelters due to return to profitability will cap any upswing in aluminium prices.
However, the current average cost of the Chinese smelters is $2,000 and is rising further due to increase in bauxite and alumina and coal and power prices. These cost push factors provide a strong floor for aluminium prices.
LME aluminium is expected to trade between $2,000 to $2,400 in 2010.
Indian aluminium producers are best placed with captive bauxite, alumina, power and are insulated from across the board cost increases to a large extent.
In the pure aluminium space, the top company will be India’s Nalco. It is one of the cheapest aluminium producers and has volume upside of 30% in both aluminium and alumina due to brown field expansion.
Aluminum has been the worst performer among the base metals this year with returns close to 47% only.
Enam, a leading brokerage and research house has come out with its latest report on China’s aluminium sector and its outlook saying that aluminium demand in China is expected to grow by 15% in 2010 on the back of revival in construction and auto segments.
Showing posts with label China. Show all posts
Showing posts with label China. Show all posts
Saturday, 2 January 2010
Monday, 21 December 2009
Finally, India loses top gold buyer status
Finally, it is almost certain that India will lose its numero uno status as world’s biggest gold consumer to China.
Since many years India has been ruling the world as the top consumer of the yellow metal but this year and increased surge in demand from China and a fall in gold jewellery sales in India due to high prices have caused India losing the top slot.
China’s rapidly growing economy and investment demand could see it add gold to the long list of commodities where it is the world’s largest buyer.
The story this year is mostly about falling demand in India — down by more than half in the first nine months of this year through September.
Gold’s record-breaking run, which has lifted prices 28 per cent this year in rupee terms, saw Indians cashing in on jewelry and gold bars, while the weakest monsoon in nearly 40 years hurt incomes in the rural sector that is the bedrock of consumer purchases.
In contrast, China’s demand was up 8 per cent in the same period. China could be buying gold as they are not sure what the value of their currency would be against the dollar. But gold is not intrinsic to them as it is to Indians.
Metals consulting firm GFMS projects that China’s gold demand will total 432 tonnes this year, and that India’s will total 422 tonnes.
A severe monsoon and record prices were behind the drop in Indian consumption this year, while loose liquidity in China has driven a buying spree across a range of resources.
India’s growth rate is catching up with that of China, and appears to be entering the early stages of the high-growth era that China saw from 1992 to 1993, giving consumers more purchasing power.
The extent of the fall in purchases could be building pent-up demand that might lead to a big correction.
Analysts in India said the drastic fall in demand must not be taken to mean India’s appetite for gold fell to the same extent.
A lot of consumers recycled old jewelry to buy new jewellery, the analysts said, while others sold gold bars to profit from high gold prices.
India’s total demand may have fallen by only 5 per cent to 10 per cent, when taking into account the recycled gold.
When Indians get used to new price levels, their traditional affection for gold might revive consumption, as there is a huge latent demand in India that could explode if prices make a significant correction.
In the long run, China might still overtake India. Economic and social indicators point to its greater affluence and spending capacity.
In the last decade, India’s gold imports remained capped under 800 tonnes despite a rising population and per capita income.
In rural markets, Indians are buying luxury goods such as automobiles and televisions, while the picture is different in rural China.
China is stepping up efforts to extend consumption in rural areas, including the newly wealthy people who are trying to own top brand gold for social status purposes.
Since many years India has been ruling the world as the top consumer of the yellow metal but this year and increased surge in demand from China and a fall in gold jewellery sales in India due to high prices have caused India losing the top slot.
China’s rapidly growing economy and investment demand could see it add gold to the long list of commodities where it is the world’s largest buyer.
The story this year is mostly about falling demand in India — down by more than half in the first nine months of this year through September.
Gold’s record-breaking run, which has lifted prices 28 per cent this year in rupee terms, saw Indians cashing in on jewelry and gold bars, while the weakest monsoon in nearly 40 years hurt incomes in the rural sector that is the bedrock of consumer purchases.
In contrast, China’s demand was up 8 per cent in the same period. China could be buying gold as they are not sure what the value of their currency would be against the dollar. But gold is not intrinsic to them as it is to Indians.
Metals consulting firm GFMS projects that China’s gold demand will total 432 tonnes this year, and that India’s will total 422 tonnes.
A severe monsoon and record prices were behind the drop in Indian consumption this year, while loose liquidity in China has driven a buying spree across a range of resources.
India’s growth rate is catching up with that of China, and appears to be entering the early stages of the high-growth era that China saw from 1992 to 1993, giving consumers more purchasing power.
The extent of the fall in purchases could be building pent-up demand that might lead to a big correction.
Analysts in India said the drastic fall in demand must not be taken to mean India’s appetite for gold fell to the same extent.
A lot of consumers recycled old jewelry to buy new jewellery, the analysts said, while others sold gold bars to profit from high gold prices.
India’s total demand may have fallen by only 5 per cent to 10 per cent, when taking into account the recycled gold.
When Indians get used to new price levels, their traditional affection for gold might revive consumption, as there is a huge latent demand in India that could explode if prices make a significant correction.
In the long run, China might still overtake India. Economic and social indicators point to its greater affluence and spending capacity.
In the last decade, India’s gold imports remained capped under 800 tonnes despite a rising population and per capita income.
In rural markets, Indians are buying luxury goods such as automobiles and televisions, while the picture is different in rural China.
China is stepping up efforts to extend consumption in rural areas, including the newly wealthy people who are trying to own top brand gold for social status purposes.
Friday, 24 April 2009
Who holds the highest gold reserves?
China becoming the fifth biggest holder of gold reserves with 1054 tonnes and it has already hit the headlines on Friday leading to a marginal rise in gold prices in major trading centres.
The world leader in gold reserves is United States with 8133 tonnes as on September 2008 that accounts for 76.5% of its foreign exchange reserves. Germany has the second highest gold reserves at 3412.6 tonnes while IMF has 3217, France has 2508 tonnes constituting 58.7% of its forex assets.
Italy has 2451.8 tonnes constituting 61.9% of forex reserves followed by Switzerland at 1040 constituting 23.8% of total forex reserves.
India is way down at 14th position with gold reserves of 357.7 tonnes representing 3% of total forex reseres.
China Agency Xinhua reported that China’s additional gold acquistion represents an increase of 454 tonnes from 600 tonnes in 2003, the last time China announced an adjustment of its gold holdings. The country adjusted its holding of gold reserves twice this century. It raised its holding from 394 tonnes to 500 tonnes in 2001, and to 600 tonnes in 2003, Hu said.
The world leader in gold reserves is United States with 8133 tonnes as on September 2008 that accounts for 76.5% of its foreign exchange reserves. Germany has the second highest gold reserves at 3412.6 tonnes while IMF has 3217, France has 2508 tonnes constituting 58.7% of its forex assets.
Italy has 2451.8 tonnes constituting 61.9% of forex reserves followed by Switzerland at 1040 constituting 23.8% of total forex reserves.
India is way down at 14th position with gold reserves of 357.7 tonnes representing 3% of total forex reseres.
China Agency Xinhua reported that China’s additional gold acquistion represents an increase of 454 tonnes from 600 tonnes in 2003, the last time China announced an adjustment of its gold holdings. The country adjusted its holding of gold reserves twice this century. It raised its holding from 394 tonnes to 500 tonnes in 2001, and to 600 tonnes in 2003, Hu said.
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