Description
This is a PPT on fundamental analysis of non-ferrous metal.
News pertaining to metals has a long term impact ? Industrial development figures ? Strikes / labour unrest in mines producing metals ? Industrial growth figures released by high demand nations ? GDP numbers ? Housing data
Copper (cuprum) has been known since prehistoric time. It has been mined for more than 5000 years. One of the first metals known to humans, free copper was probably mined in the Tigris?Euphrates valley as long ago as the 5th century Copper is called the "metal with a Ph.D. in economics." This is because copper has countless industrial uses, and thus serves as an activity gage for the global economy. The red precious metal shows up in home appliances, electrical wiring, and automotive parts ?? pretty much
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Between 1900 and 2000, copper demand grew from 500,000 tonnes to around 13,000,000 tonnes, with growth accelerating since the 1950's. With some many widespread uses it is not surprising copper demand keeps growing and now with China, India and others de Copper is not a particularly rare metal and it is produced in many countries. Today the majority 88% comes from primary production, but of growing importance is secondary supply which accounts for 12% of total refined copper supply.
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The wide production base means there are numerous factors that can affect production and therefore prices. In North and South America, production is often affected by labour unrest, in parts of Asia and Africa production can be affected by political unrest In addition, weather is an important factor affecting supply, with floods and droughts either hitting the production process or the transport of raw materials. New production also takes years to commission as the scale of mining is large, it takes enormous financing, requires endless environmental permissions and needs extensive infrastructure as well. All these factors make it hard for the market to balance supply and demand.
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Zinc is the third most used non ferrous metal. It was mainly used as an alloying metal with copper to form brass. Brass is a large market especially in the construction and building supplies sectors, however, zinc is now primarily used to galvanise steel and in zinc die-casting The engineering industry also uses zinc pressure die casting to produce thousands of components for cars, household items and industry in general. Zinc sheet is used in some countries for roofing, guttering and general weather-proofing
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Zinc is produced extensively in North and South America, Asia, Australia and in Europe. This wide base of producers, combined with the industries' low level of integration between miners and smelters, means the industry has often been slow to react to poor market conditions. In the past, this has led to long periods of over production with producers reluctant to make significant production cutbacks to keep supply and demand in balance. As a result, zinc stocks tend to build up significantly during economic slowdowns and during economic recoveries zinc prices often lag behind the other base metals, while its high levels of stocks are drawdown
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Zinc demand Zinc demand growth in the western world is relatively quiet and any turn down in the construction and auto industries is likely to depress western demand further. However, asia and especially China have seen a marked pick up in demand and with China increasing its infrastructure building, zinc demand is likely to grow strongly for many years to come Supply Approximately 30% of Zinc Supply comes from recycling. Zinc production, starts with the mining of bulk ores, which often contain a mixture of lead, zinc and silver. Zinc concentrates can then be smelted to about 98% purity, which is acceptible for some general galvanising, but demand for higher purity zinc, as traded on the LME, now means that most zinc is produced electrolytically, to produce High Grade and Special high Grade zinc, with purities of 99.95% and 99.99% respectively - the latter being the benchmark grade for LME contracts.
The most commercially mined aluminum ore is bauxite, as it has the highest content of the base metal. India has the fifth largest bauxite reserves with deposits of about 3 bn tonnes or 5% of world deposits Production of 1 tonne of aluminum requires 2 tonnes of alumina while production of 1 tonne of alumina requires 2 to 3 tonnes of bauxite. Process The aluminum production process can be categorized into upstream and downstream activities. The upstream process involves mining and refining while the downstream process involves smelting and casting & fabricating. Downstream-fabricated products consist of rods, sheets, extrusions and foils. Power is amongst the largest cost component in manufacturing of aluminum, as the production involves electrolysis.
The Indian aluminium sector is characterized by large integrated players like Hindalco and Nalco. The other producers of primary aluminum include Indian Aluminum (Indal), now merged with Hindalco, and Sterlite Industries. The per capita consumption of aluminium in India continues to remain abysmally low at under 1 kg as against nearly 25 to 30 kgs in the US and Europe, 15 kgs in Japan, 10 kgs in Taiwan and 3 kgs in China. The key consumer industries in India are power, transportation, consumer durables, packaging and construction. Of this, power is the biggest consumer (about 44% of total) followed by infrastructure (17%) and transportation (about 10% to 12%). The metal has a long working life due to its propensity for recycling.
Supply Demand Barriers to entry Bargaining power of suppliers
• Supply of aluminum is in excess and any deficit can be imported at low rates of duty. Currently, domestic production comfortably meets domestic requirements. • Demand for aluminum is estimated to grow at 6%-8% per annum in view of the low per capita consumption in India. Also, demand for the metal is expected to pick up as the scenario improves for user industries, like power, infrastructure and transportation.
• Large economies of scale. Consequently, high capital costs.
•Most domestic players operate integrated plants. Bargaining power is limited in case of power purchase, as Government is the only supplier. However, increasing usage of captive power plants (CPP) will help to rationalize power costs to a certain extent in the long-term.
Bargaining power of customers
Competition
• Being a commodity, customers enjoy relatively high bargaining power, as prices are determined on demand and supply. • Competition is primarily on quality and price, as being a commodity, differentiation is difficult. However, the recent spate of consolidation has reduced the competitive pressure in the industry. Further, increasing value addition to aluminum products has helped some companies protect themselves from the high volatilities witnessed in this industry
Consumption and Demand Pattern
In 2010, world aluminum consumption stood at around 34 m tonnes, a sharp decline of over 8% from around 37.5 m tonnes in 2009 India witnessed increase in demand of aluminum due to growth in user segments such as automobiles, industrial and infrastructure resulting in a strong 27.8% growth in domestic demand. n FY10, LME aluminum prices staged a remarkable recovery to around US$ 2,000 levels after touching lows of sub US$ 1,400 in March 2009. The depreciating Rupee helped domestic aluminum producers partially as the prices are dollar denominated.
World Production
Consumption
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Lead is a heavy, malleable, bluish grey metal. It is one of the metals most resistant to common corrosion problems. Lead has some important properties, in particular malleability (i.e. it can be hammered into shape), ease of production, ease of melting and joining, and good corrosion resistance. The main producers of lead mineral are: China, Australia, USA, Peru, Canada and Mexico. These six countries produce three quarters of world output. The largest exporters of lead metal are nations which mine large quantities of lead ore: China, Australia and Canada.
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Many of lead's uses have been in decline for some time, As lead is seen as an environmentallyunfriendly metal, its future is under constant attack.
Today, Lead's main use is for batteries, with the vehicle battery being all important. It is also being used in industry to power mobile phone base stations, electrically powered vehicles such as fork-lift trucks and local delivery vans and to provide emergency power to computer rooms and hospitals.
Factors affecting supply
As roughly half of lead comes from recycled lead, it is worth noting that in times of low lead prices, the collection of scrap can become unprofitable and this has a marked impact on lead supply. Likewise, when lead price are high, there is a bigger incentive to find lead scrap and to supply it to the market. This makes lead more responsive to changes in price, than some of other metals that are more dependent on primary production and have relatively small secondary supply
doc_731669456.pptx
This is a PPT on fundamental analysis of non-ferrous metal.
News pertaining to metals has a long term impact ? Industrial development figures ? Strikes / labour unrest in mines producing metals ? Industrial growth figures released by high demand nations ? GDP numbers ? Housing data
Copper (cuprum) has been known since prehistoric time. It has been mined for more than 5000 years. One of the first metals known to humans, free copper was probably mined in the Tigris?Euphrates valley as long ago as the 5th century Copper is called the "metal with a Ph.D. in economics." This is because copper has countless industrial uses, and thus serves as an activity gage for the global economy. The red precious metal shows up in home appliances, electrical wiring, and automotive parts ?? pretty much
?
?
Between 1900 and 2000, copper demand grew from 500,000 tonnes to around 13,000,000 tonnes, with growth accelerating since the 1950's. With some many widespread uses it is not surprising copper demand keeps growing and now with China, India and others de Copper is not a particularly rare metal and it is produced in many countries. Today the majority 88% comes from primary production, but of growing importance is secondary supply which accounts for 12% of total refined copper supply.
?
?
?
?
?
The wide production base means there are numerous factors that can affect production and therefore prices. In North and South America, production is often affected by labour unrest, in parts of Asia and Africa production can be affected by political unrest In addition, weather is an important factor affecting supply, with floods and droughts either hitting the production process or the transport of raw materials. New production also takes years to commission as the scale of mining is large, it takes enormous financing, requires endless environmental permissions and needs extensive infrastructure as well. All these factors make it hard for the market to balance supply and demand.
?
?
?
Zinc is the third most used non ferrous metal. It was mainly used as an alloying metal with copper to form brass. Brass is a large market especially in the construction and building supplies sectors, however, zinc is now primarily used to galvanise steel and in zinc die-casting The engineering industry also uses zinc pressure die casting to produce thousands of components for cars, household items and industry in general. Zinc sheet is used in some countries for roofing, guttering and general weather-proofing
?
Zinc is produced extensively in North and South America, Asia, Australia and in Europe. This wide base of producers, combined with the industries' low level of integration between miners and smelters, means the industry has often been slow to react to poor market conditions. In the past, this has led to long periods of over production with producers reluctant to make significant production cutbacks to keep supply and demand in balance. As a result, zinc stocks tend to build up significantly during economic slowdowns and during economic recoveries zinc prices often lag behind the other base metals, while its high levels of stocks are drawdown
?
?
Zinc demand Zinc demand growth in the western world is relatively quiet and any turn down in the construction and auto industries is likely to depress western demand further. However, asia and especially China have seen a marked pick up in demand and with China increasing its infrastructure building, zinc demand is likely to grow strongly for many years to come Supply Approximately 30% of Zinc Supply comes from recycling. Zinc production, starts with the mining of bulk ores, which often contain a mixture of lead, zinc and silver. Zinc concentrates can then be smelted to about 98% purity, which is acceptible for some general galvanising, but demand for higher purity zinc, as traded on the LME, now means that most zinc is produced electrolytically, to produce High Grade and Special high Grade zinc, with purities of 99.95% and 99.99% respectively - the latter being the benchmark grade for LME contracts.
The most commercially mined aluminum ore is bauxite, as it has the highest content of the base metal. India has the fifth largest bauxite reserves with deposits of about 3 bn tonnes or 5% of world deposits Production of 1 tonne of aluminum requires 2 tonnes of alumina while production of 1 tonne of alumina requires 2 to 3 tonnes of bauxite. Process The aluminum production process can be categorized into upstream and downstream activities. The upstream process involves mining and refining while the downstream process involves smelting and casting & fabricating. Downstream-fabricated products consist of rods, sheets, extrusions and foils. Power is amongst the largest cost component in manufacturing of aluminum, as the production involves electrolysis.
The Indian aluminium sector is characterized by large integrated players like Hindalco and Nalco. The other producers of primary aluminum include Indian Aluminum (Indal), now merged with Hindalco, and Sterlite Industries. The per capita consumption of aluminium in India continues to remain abysmally low at under 1 kg as against nearly 25 to 30 kgs in the US and Europe, 15 kgs in Japan, 10 kgs in Taiwan and 3 kgs in China. The key consumer industries in India are power, transportation, consumer durables, packaging and construction. Of this, power is the biggest consumer (about 44% of total) followed by infrastructure (17%) and transportation (about 10% to 12%). The metal has a long working life due to its propensity for recycling.
Supply Demand Barriers to entry Bargaining power of suppliers
• Supply of aluminum is in excess and any deficit can be imported at low rates of duty. Currently, domestic production comfortably meets domestic requirements. • Demand for aluminum is estimated to grow at 6%-8% per annum in view of the low per capita consumption in India. Also, demand for the metal is expected to pick up as the scenario improves for user industries, like power, infrastructure and transportation.
• Large economies of scale. Consequently, high capital costs.
•Most domestic players operate integrated plants. Bargaining power is limited in case of power purchase, as Government is the only supplier. However, increasing usage of captive power plants (CPP) will help to rationalize power costs to a certain extent in the long-term.
Bargaining power of customers
Competition
• Being a commodity, customers enjoy relatively high bargaining power, as prices are determined on demand and supply. • Competition is primarily on quality and price, as being a commodity, differentiation is difficult. However, the recent spate of consolidation has reduced the competitive pressure in the industry. Further, increasing value addition to aluminum products has helped some companies protect themselves from the high volatilities witnessed in this industry
Consumption and Demand Pattern
In 2010, world aluminum consumption stood at around 34 m tonnes, a sharp decline of over 8% from around 37.5 m tonnes in 2009 India witnessed increase in demand of aluminum due to growth in user segments such as automobiles, industrial and infrastructure resulting in a strong 27.8% growth in domestic demand. n FY10, LME aluminum prices staged a remarkable recovery to around US$ 2,000 levels after touching lows of sub US$ 1,400 in March 2009. The depreciating Rupee helped domestic aluminum producers partially as the prices are dollar denominated.
World Production
Consumption
?
Lead is a heavy, malleable, bluish grey metal. It is one of the metals most resistant to common corrosion problems. Lead has some important properties, in particular malleability (i.e. it can be hammered into shape), ease of production, ease of melting and joining, and good corrosion resistance. The main producers of lead mineral are: China, Australia, USA, Peru, Canada and Mexico. These six countries produce three quarters of world output. The largest exporters of lead metal are nations which mine large quantities of lead ore: China, Australia and Canada.
?
?
?
Many of lead's uses have been in decline for some time, As lead is seen as an environmentallyunfriendly metal, its future is under constant attack.
Today, Lead's main use is for batteries, with the vehicle battery being all important. It is also being used in industry to power mobile phone base stations, electrically powered vehicles such as fork-lift trucks and local delivery vans and to provide emergency power to computer rooms and hospitals.
Factors affecting supply
As roughly half of lead comes from recycled lead, it is worth noting that in times of low lead prices, the collection of scrap can become unprofitable and this has a marked impact on lead supply. Likewise, when lead price are high, there is a bigger incentive to find lead scrap and to supply it to the market. This makes lead more responsive to changes in price, than some of other metals that are more dependent on primary production and have relatively small secondary supply
doc_731669456.pptx