Reality check on demand – The feedback from producers as of end
August/early September suggests that: for downstream sectors, inventory of
finished goods remained mostly normal, 2) end user demand for basic
materials in August was slightly better than what producers had expected.
MoM trend for order book for finished goods in September is likely to remain
positive, yet with limited acceleration, as the percentage of respondents who
saw sequential improvement remained unchanged at about 60% and 3)
material demand points to a continued diverse trend into September, with
steel and coal decelerating and cement picking up, likely a reflection of both
seasonality and inventory restocked. The percentage of producers seeing
improving MoM demand was 20% for steel mills (down from 40% in August),
100% for cement producers (flat from 100% in August) and 25% for coal
producers (down from 60% in August).
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Steel – worst is nearly over
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Coal – stable domestic price, seasonal weakness in seaborne market
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Cement – coastal price picking up, be selective for 2010E
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Aluminium – upside risk in 4Q09 pricing
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Alumina – picking up in pricing
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Copper – import remains strong