With captive mines under their belts, SAIL, JSPL and Tata Steel could emerge as the biggest winners due to rising iron ore prices. These companies are well placed to cash in on the subsequent rise in steel prices, while their raw material costs will remain comparatively on the lower side
With iron ore prices skyrocketing, steel companies like Steel Authority of India (SAIL), Jindal Steel and Power ltd (JSPL) and Tata Steel are likely to make the most of the situation.
All three companies have access to assured iron ore supplies from their own private mines. Unlike others, these companies are not dependent on external iron ore purchases.
Last week, we had reported on how iron prices in the spot market had increased due to low supply from Indian mines. Softening of iron ore prices looks unlikely as supply bottlenecks continue to haunt Indian mining activities. Iron ore prices have touched a high of $192 per tonne, moving closer to the all-time high of $200 per tonne reached in 2008. Industry sources expect a further increase of 10% to 20%.
Amid such a scenario, SAIL, JSPL and Tata Steel are expected to emerge as the biggest winners. According to a PTI report published last week, steel companies like Tata Steel, SAIL and JSW Steel have increased the prices of their products by about Rs6,000 a tonne since February 2010. This increase for Tata Steel and SAIL will go straight to their respective bottom-lines.
Among the smaller steel companies, Prakash Industries and Ispat industries are expected to benefit. Both these companies don’t have access to their own iron ore mines, but have reportedly enough raw material supply through long-term contracts. However, there are concerns on whether Prakash Industries will be able to use its long-term deals to its advantage.
SAIL, JSPL and Tata Steel will be able to jack up their selling prices, and will enjoy greater margins, thanks to lower input costs.
Last week, steel secretary Atul Chaturvedi had indicated that further fluctuation in steel prices was likely. “Steel prices could rise or fall by Rs2,000-Rs2,500 a tonne mainly due to fluctuation in prices of raw material in the next six months,” Mr Chaturvedi was quoted as saying. On an average, any change in iron ore prices could lead to a doubling of steel prices.
Growing investor optimism over a possible rebound in the US economy helped to boost prices
Oil prices gained above $85 a barrel today in Asia as growing investor optimism about the US economy boosted equity and commodity prices, reports PTI.
Benchmark crude for May delivery was up 16 cents to $85.28 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $0.42 to settle at $85.12 on Friday.
Oil prices have bobbed around the $85/barrel mark for about three weeks, holding gains after a jump from $69 in February amid signs that the US economy was improving.
The Dow rose 0.6% on Friday, and most Asian stock indices gained today, led by a 2.2% jump in Japan and an advance of 1.7% in Hong Kong.
Oil traders often look to equity markets as a barometer of overall investor sentiment.
“The economic health of the US is getting better,” said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. “The positive economic data has supported the increasing confidence among investors, and that’s bullish for oil.”
Despite growing corporate earnings, the unemployment rate remains high and US crude demand hasn’t yet recovered strongly.
“Crude inventories are still very high,” Mr Shum said. “Oil prices would be a lot lower than $85 if you worried about fundamentals.”
In other Nymex trading in May contracts, heating oil rose 1.15% to $2.262 a gallon, and gasoline increased 1.19 cents to $2.365 a gallon. Natural gas jumped 5.6 cents to $4.313 per 1,000 cubic feet.
In London, Brent crude was up 17 cents at $87.42 on the ICE Futures Exchange.
The mad glut in the mobile phones market is compelling advertisers to sanction some really bizarre advertising material
A completely wasteful TV campaign from the makers of Maxx Mobile. It stars Indian cricket team captain, Mahendra Singh Dhoni. In each commercial, the man cribs and carps that people are forever stealing his Maxx Mobile. So irresistible is his precious cell phone. And he then goes on to urge people to buy their own Maxx Mobile! Sometimes he’s complaining from inside an airport, at other times from malls and cafes. And not much else happens in the commercials.
This sort of nonsense advertising only helps highlight the cluttering levels in the Indian mobile phones market. The mad glut which is now compelling marketers to sanction some really bizarre advertising material. In fact, even as Maxx Mobile goes about its ‘robbery’ business, another phone with a totally similar sounding brand name called Micromax has hit the market! Thus adding to all the confusion. So for both marketers now, not only do they have to tell their own stories, they also need to make sure viewers don’t mistake one with the other! Total madness!
And as if all this wasn’t bad enough, Dhoni has only till recently been plugging another cell phone brand called Aircel! Confusion, confusion, confusion! Guess the captain managed to get bigger bucks from Maxx Mobile, and so, as he says in the Aircel ads, ‘it was time to move on’. Which he gleefully did, but what about all the resultant chaos?
Here’s the problem with the ad creative: In every single commercial, Dhoni simply complains about his stolen phone. This means, nothing actually registers about the brand itself, all one notices and recalls is the whining cricketer. Totally incredible when you consider Maxx operates in the lower end of the mobile phones market. Another thing: after a couple of exposures, it gets damn tiring to watch him relate his sob story. The least the creative ought to have done was to weave in interesting stories around his stolen phones. So that, at the very least, each commercial appears fresh.
But here’s the bigger picture: I really think ‘desi’ mobile phone marketers, in their desperation to be noticed, are totally losing the plot. In a highly cluttered category, distinctive, path-breaking, high involvement and memorable advertising is extremely critical for success in the market place. And having watched Vodafone show the way with its zany Zoozoos, it’s unforgivable that rival brands have learnt nothing.
So as Mr Dhoni keeps losing his cell phones, makers of Maxx Mobile will keep losing their big ad budgets on wasteful advertising spend. Wonder who’s the one being robbed out here!