Modi Government Gets 43000 Crore by Selling Stake in Coal India ,ONGC ,NHPC.

Kicking off the mega disinvestment drive, government on Wednesday approved the sale of shares in Coal India, ONGC and NHPC to garner a combined Rs 43,000 crore.

"Disinvestment proposals of ONGC, Coal India and NHPC have been cleared by the Cabinet Committee on Economic Affairs," an official source said after a meeting of the CCEA, headed by Prime Minister Narendra Modi.

At current market prices, the sale of shares in state- owned CIL, ONGC and NHPC could garner over Rs 23,000 crore, Rs 18,000 crore and Rs 2,800 crore respectively, helping the government meet its disinvestment target of Rs 43,425 crore for this fiscal.

CCEA has cleared 10 per cent stake dilution in CIL, 5% in ONGC and 11.36% in NHPC through the Offer For Sale (OFS) route, sources said.

The government has already selected merchant bankers for managing ONGC and NHPC disinvestment and is in the process for doing so for CIL.

The previous government had cleared disinvestment in SAIL and according to sources the 5% stake sale in the state-owned steel maker is likely to hit the markets this month.

The sale of 5 per cent stake or about 20.65 crore shares of SAIL at the current market price of around Rs 80.95 a piece would fetch the exchequer over Rs 1,600 crore.

The Cabinet had in July 2012 approved 10.82 per cent stake sale in SAIL. Accordingly, the first tranche of disinvestment of 5.82% was completed in March 2013. The government has missed its disinvestment target for five consecutive financial years.

In 2010-11 and 2011-12 fiscals, the government had raised Rs 22,144 crore and Rs 13,894 crore through disinvestment, against the budgeted target of Rs 40,000 crore in each year.

In 2012-13, it had raised Rs 23,956 crore, as against the target of Rs 30,000 crore. In 2013-14, the government could raise Rs 16,027 crore, as against the budgeted target of Rs 40,000 crore. The target in revised estimates was scaled down to Rs 16,027 crore.

Zinc prices to rise further on falling supply, growing demand

The zinc price in the market is shooting up. According to the investors the price of zinc will continue to run high as some of the giants in the zinc mining industry is running low on supply as the demand increases.

 

Zinc is a vital base metal being used in many industrial activities starting from sunscreens to steel coatings in the car tires.  The problem further increases as this particular base metal has very few substitutes. U.S Mint has initiated to reduce the company’s manufacturing cost, so as to increase the price for their zinc. As for the steel industry, zinc is a vital part of the industry as, the most vital metal used in the rust resistant process of steel making, in that case the steel makers  are the worst affected by this phenomena as they buy about half of the zinc produced in the world.

 

The records show that, since 2007 this is the first time zinc steep this lower than the demand. An American multinational investment banking firm, Goldman Sachs, stated that, many miners would have to face closure as they would find it difficult to locate a new source of the metal with the current pricing. Until 2018 it will be difficult for the miners to cease the demand from industries and coin maker for zinc.

 

A metal strategist of the bank, Stephen Briggs stated that, the large mines all around the would rather soon close down, leaving a very few to replace them, which will be not even that big.

 

Mann Rasmussen, an analyst stated that, there are loads and loads of unrefined zinc available in China, which could be further refined and taken into the market. But at the same time Mr. Chevely of the Investec stated that, the dependence over Chinese zinc supply is unhealthy as the supply wouldn’t even diminish the need in the country alone. 

Nickel Prices Forecasted to Keep Rising

As debate rages in the Philippines about the banning of ore exports, nickel prices have been yo-yoing, with concern fluctuating between panic over stocks and assurances that there is enough of the metal to go around.

Nickel surged back in mid-May from roughly US$8.20 per pound to highs of near $9.50. Since then it has fluctuated, never reaching its initial high; most recently it skyrocketed in August and early September on the back of nickel supply crunch fears.

The metal’s performance is a sharp difference from 2013, when suppliers were struggling with a nickel surplus that left them short on cash.

Looking for help

After Indonesia left the ore export market — the government placed a ban on ore exports in January 2014 — it left large consumers, such as China and Japan, scrambling to identify other sources.

Indonesia’s elimination from the market not only pushed prices sharply upward, but heightened interest in identifying additional supplies.

For its part, China shifted its focus to the Philippines. At the time, Indonesia accounted for 20 percent of global nickel supplies.

According to the World Bureau of Metal Statistics, in December 2013, China imported only half a million tonnes of nickel from Philippines, with 3 million coming from Indonesia.

China, the world’s largest nickel consumer, relies on the ore for use in its steel mills.

A report published in August by Patricia Mohr, Scotiabank’s vice president of economics and commodity market specialist, forecasted nickel prices to keep climbing.

“The world supply & demand balance will shift into a marked ‘deficit’ in 2015, as China depletes its inventory of Indonesian ore for ‘Nickel Pig Iron’ production (used in stainless steel),” she wrote.

Stockpiles growing

Countries are now building stockpiles should the Philippines go through on its threat to ban the export of ore deposits.

Reuters has already reported that China began stockpiling high-grade nickel laterite, known as nickel pig iron , back in May when murmurs of a ban in the Philippines started appearing.

Bloomberg reported that warehouses in Johor, Malaysia, have 157,200 tons of refined nickel, or 49 percent of the LME total, and are 38 percent higher for this year. Total LME nickel stockpiles represent about 1.5 months of solid consumption.

According to the Financial Times, nickel stocks in London Metal Exchange-registered warehouses hit a record of nearly 318,000 tonnes in August, up from 262,000 tonnes at the start of the year and 12 percent since June.

What’s next?

In a report, National Australia Bank said to expect nickel prices to remain steady until stockpile numbers start to dwindle with the ban.

As the single biggest importer of nickel, China seems to remain concerned about any potential ban — judging by its stockpiling of ore.

When Indonesia first placed a ban on exporting ore in an attempt to boost investment in its domestic smelters, nickel prices surged about 35 percent, causing concern over future stockpiles.

However, such rampant concern has been tempered in the past few days, with lawmakers in the Philippines admitting that a potential ban is months away, if not further.

Nickel slides as Philippine supply concern fades

* SocGen advises short Dec. 15 copper on growing supply

* Shanghai zinc tumbles 3 pct as speculators slash long positions

 

- Nickel shed over 5 percent on Tuesday after worries faded about a squeeze on supply from the Philippines, and other metals were knocked by a robust dollar that hit a 14-month high.

 

Three month nickel on the London Metal Exchange ended at $18,925 a tonne, down 5.04 percent and making for the biggest one day price fall since May 15.

 

The metal hit its highest since July 3 at $19,940 on Monday, after a Philippine Congressional committee approved a bill seeking a halt to exports of unprocessed mineral ores.

But the proponent of the bill said in an interview with Reuters on Tuesday that a proposed ban may not be implemented for about seven years

 

The market was jolted in January when top exporter Indonesia implemented a ban on unprocessed ore shipments, sending nickel prices soaring. Nickel is up about 40 percent so far this year.

 

The Philippines is now the top supplier of nickel ore for China's stainless steel industry following the Indonesian ban.

 

"Five or seven years is a very long time. Anything can happen in that time and I would have thought that we will see nickel ease off further," said Stephen Briggs, metals strategist at BNP Paribas in London.

 

 

METALS BROADLY DOWN

 

Selling swept through the LME metals complex, prompted by a strong dollar <.DXY> that hit 14-month highs against a basket of major currencies. A firm dollar makes commodities priced in the U.S. currency more expensive to buyers outside the United States. [USD/]

 

Zinc and nickel were the biggest decliners as investors sold off long positions on the view that prices had got ahead of supply-demand fundamentals.

 

Investors in both metals have been betting that future shortages would boost prices, but supplies are still adequate.

 

"Zinc has moved up a ... long way, and it too has rallied ahead of the fundamentals. It certainly has moved beyond $2,300 rather sooner than I expected," Briggs said.

 

LME zinc ended down 3.6 percent at $2,304 a tonne, and the most-traded November zinc contract on the Shanghai Futures Exchange fell 3 percent before closing slightly off its lows at 16,720 yuan ($2,726).

 

"Open interest has tumbled today, so I believe it's to do with unwinding of previously speculative long positions," said a source at a trade house in Shanghai.

 

LME copper closed at $6,840 a tonne, down 2.15 percent, having hit its lowest since late June at $6,821.75.

 

Societe Generale initiated a short copper position in a note on Monday, citing prospects of rising supply.

 

"We recommend shorting the Dec-15 LME copper contract at current levels above $6,900 per tonne, with a target at $6,500 per tonne or lower," said analyst Mark Keenan of Societe Generale in Singapore.

 

The Shanghai Futures Exchange reopened after a long holiday weekend but Hong Kong was closed on Tuesday.

 

In other metals, aluminium lost 1.38 percent to $2,068 a tonne. Lead fell 3.27 percent to $2,127 a tonne, having hit its lowest since mid-June earlier at $2,124 a tonne, while tin shed 2.11 percent to $20,900 tonne

FMC seeks clarity on Kotak deal with FTIL to buy 15% in MCX

Commodity market regulator says execution date not clear.

Commodity market regulator Forward Markets Commission has sought more clarity from MCX on the Financial Technologies and Kotak Mahindra Bank deal before it can allow the exchange to launch new contracts for the next calendar year.

Agreement ‘conditional’

In a response to an MCX letter seeking permission to launch fresh contracts, the market regulator had said the share purchase agreement signed between Financial Technologies and Kotak Mahindra Bank appears to be conditional.

“The execution of the agreement depends on revision of the technology agreement between MCX and FTIL. The deal lacks clarity with regard to the exact date of its execution and consequently does not inspire adequate confidence and assurance with regard to the proposed acquisition of a 15 per cent stake in MCX,” said FMC.

“Therefore the exchange should clarify as to exactly by what date the disinvestment of the remaining 15 per cent shall be completed,” it said.

Last month, the FMC had cleared the FTIL-Kotak Bank deal but has now sought more clarity so that it can lift the ban on the launch of new contracts by the exchange.

The regulator has also impressed upon the exchange that it has to take corrective measures based on the findings of the Oversight Committee and PricewaterhouseCoopers before permission is sought to launch new contracts.

In response to the FMC’s observations, MCX has clarified that it has written to FTIL seeking the exact date by which the Kotak Bank deal can be executed.

Launch of new contracts

The findings of the Oversight Committee have been addressed and then conveyed to the FMC. The findings will be reviewed by the audit committee this week, said MCX.

On PwC’s findings, the exchange said it has taken action against the erring employees named in the report by filing a police case. The latest status will be reviewed by the oversight committee within a week and updated to FMC, it said.

“We are hopeful that the issues raised by FMC will be addressed by September 30 and FMC approval for the new contract launch will be received,” said MCX.

Nickel price rally still has a long way to go

Indonesia, supplying more than a fifth of global exports, surprised the mining world in January by putting into effect an outright ban on nickel ore exports.

Initially record warehouse inventories, massive stockpiling by Chinese pig iron producers and growing mine supply kept a lid on the price which was languishing at near five-year lows below $14,000 a tonne at the start of the year.

But the Asian nation, against expectations, stuck to its guns and the ban, in combination with fears that tensions with Russia could affect supply from top miner Norilsk, sent the price of the steelmaking ingredient above $20,000 in May.

The price subsequently pulled back from those levels, but last week saw nickel take another stab at $20,000 a tonne after the Philippines – the only other source in the region of high-grade laterite ore required by China and responsible for 9% of global mine supply – hinted that it may follow Indonesia's playbook.

Even before suggestions of an ore export ban Philippine supply has been sketchy

Nickel was last trading at $18,750 and is up 35% in 2014, but expectations are for the price to appreciate sharply this year and next.

Capital Economics, a research house, says Chinese pig iron makers are likely to have run down their stocks by the first half of next year.

Even before suggestions of an ore export ban Philippine supply has been sketchy. Already Japanese refiners and steelmakers are struggling to buy ore and once China re-enters the market regional supply will be highly constrained.

Capital Economics argues that the rise in LME stocks of refined nickel at more than 330,000 tonnes is less an indication that supply is ample, but that metal from China and Australia, previously held off market are being moved into visible locations.

Another factor that should keep prices on the ball is the slow progress with the construction of smelters (some 16 have been proposed) in Indonesia, ostensibly the reason for the ban in the first place.

Capital Economics forecasts nickel to reach $21,000 next year, but others are much more bullish.Citibank sees $24,000 next year and a peak of $30,000 while Scotiabank predicts $23,700 in 2015 and highs of $26,500 the year after that.

Japanese buyers concur to pay record prices for aluminum

The biggest aluminum importer of Asia, Japan agreed to the London Metal Exchange to pay for the metal according to the benchmark price set in the region.

According to the information provided by the sources, buyers have already struck a deal with Rio Tinto, whose proposal stated, 420 dollars per ton, which stood lower to other proposals varying from 435 dollars to 460 dollars per ton. Many others are also involved in the process of negotiation, some of them are, BHP Billiton, United Company Rusal and Alcoa Inc. other than these company’s, none others were able to struck any deals.

According to the reports, the supply of aluminum in Japan is not as tight as it is in Europe and united states and so the buyers are definitely convinced by the request for higher premiums. The price negotiations started last month will probably continue for the next few weeks

Due to the smelter shut downs and tight in supplies the aluminum producers had to increase the premiums on the base metal.