Category: Commodities

IEA raises 2024 oil demand forecast for third month in a row

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The International Energy Agency (IEA) on Thursday made a further upward revision to its 2024 oil demand growth forecast, though its projection remains dramatically lower than producer group OPEC’s expectations.

The Paris-based agency’s forecast, its third consecutive upward revision in as many months, predicts that global oil consumption will rise by 1.24 million barrels per day (bpd) in 2024, compared with OPEC’s 2.25 million bpd projection.

The IEA and OPEC have clashed in recent years over issues such as long-term demand and the need for investment in new supplies.

The IEA’s latest upward revision, up 180,000 bpd from its previous projection, was linked to improving global economic growth and lower crude prices in the fourth quarter plus China’s expanding petrochemicals sector.

“The consensus economic outlook has improved somewhat over the last few months in the wake of the recent dovish pivot in central bank policy,” the IEA said in its January report.

“The fourth-quarter 2023 slump in oil prices acts as an additional tailwind.”
Oil prices kicked off the year on a weak footing as demand uncertainty offset the impact of a new round of supply cuts by OPEC and its allies, together known as OPEC+, as well as rising tensions in the Middle East.

Brent crude was trading around $78 a barrel on Thursday, having lost about 10% in 2023 to finish the year at $77.04.

The IEA said the expected halving in the rate of demand expansion year on year in 2024 is the result of post-pandemic recovery being all but complete, lacklustre economic growth in major economies, energy efficiency improvements and a booming electric vehicle fleet.

MARKET CONCERNS

Rising geopolitical tensions in the Middle East, which the IEA says accounts for a third of the world’s seaborne oil trade, has peturbed markets.

Attacks by Iran-allied Houthi militia on ships in the Red Sea since November have slowed trade between Asia and Europe and alarmed major powers in an escalation of the war between Israel and Palestinian Hamas militants in Gaza.

This could disrupt the flow of oil via key trade chokepoints, though a rising number of ship owners are diverting cargoes away from the Red Sea.

Barring significant disruption to oil flows, the IEA said “the market looks reasonably well supplied in 2024” even though OPEC and the wider OPEC+ alliance have implemented a series of output cuts since late 2022 to support the market. A new cut for the first quarter took effect this month.

While these cuts may tip the market into a small deficit at the start of the year, the IEA predicted that strong growth from producers outside the OPEC+ group – including the United States, Brazil and Guyana – could lead to a substantial surplus if the extra voluntary cuts are unwound in the second quarter.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Gold near five-week low as expectations for rate-cut ease: Should you invest?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Gold prices hovered near five-week lows on Thursday, January 18, as hawkish remarks from Federal Reserve officials and robust data dampened investors’ expectations for deeper and early interest rate cuts in the United States this year. Spot gold, after falling to $2,001.72, its lowest point since December 13, showed a marginal recovery, edging 0.1% higher to $2,008.59 per ounce, according to news agency Reuters.

Back home, gold futures, maturing on February 5, 2024, stood at ₹61,589 per 10 grams.

The strengthening of the US dollar played a pivotal role in the recent downturn of gold prices, as highlighted by Brian Lan, a representative from the Singapore-based dealer Gold Silver Central. According to a Reuters report, Lan said that the dollar’s gain over the past few days has imposed pressure on gold prices.

The dollar’s ascent was further fueled by data revealing a higher-than-expected increase in US retail sales in December, maintaining the country’s economic stability as it entered the new year.

According to Chintan Mehta, CEO, Abans Holdings, a heightened sense of instability in the Red Sea region, marked by an escalation in attacks and counterattacks on the geopolitical front, has supported the demand for gold.

Additionally, investors are closely monitoring statements from Federal Reserve members, particularly Atlanta Federal Reserve President Raphael Bostic, who is expected to speak later in the day.

The outlook

Rahul Kalantri, VP Commodities, Mehta Equities believes that gold prices will remain volatile.

“The yellow metal is anticipated to find support at $2000-1988 per ounce, with resistance at $2024-2038 per ounce. In terms of rupee, gold is likely to find support at ₹61,250-61,080 per 10 grams, with resistance at ₹61,690,-₹61,840 per 10 grams.

Mehta of Abans Holdings, however, believes that gold prices may see a rally going ahead once participation expands.

“We believe that gold will consolidate at its current prices. Currently, we are observing a rally up to ₹63,500. On the downside, gold may experience a correction down to ₹61,000 levels,” he said.

Should one invest?

Mehta emphasises the importance of monitoring commodity markets during these uncertain times. He added that gold remains an attractive investment opportunity despite the recent dip.

Lan further added that it’s time to make a profit by investing in the yellow metal.

“The year has just started, and probably a lot of investors think that prices are not going any higher, so it’s time to secure gains. It’s a usual market cycle from what we see,” he was quoted as saying by Reuters.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

PhonePe launches limited period offer to convert digital gold into jewellery: Here’s how to avail

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

PhonePe on Tuesday, January 16, announced its partnership with CaratLane to help consumers redeem their accumulated digital gold for jewellery. This offer is applicable for those who invested in 24K digital gold on PhonePe in tandem with CaratLane.

Additionally, consumers can avail up to 7% extra on redemption amount (7% for diamond jewellery, 4% for gold jewellery, and 2% for gold coins), PhonePe said.

This offer is valid till January 31, 2024.

According to Sonika Chandra, Chief Business Officer – Consumer Payments at PhonePe, said, “Gold Savings is one of the key investment options for customers in India, and we have seen a strong inclination towards digital gold investment on our platform in the last few years.”

Here are the steps to convert digital gold into jewellery on CaratLane:

Step 1: Visit a retail or online store of CaratLane and choose the jewellery

Step 2: At checkout, redeem digital gold by verifying the digital gold account

Step 3: Complete payment fully or partially for the jewellery with digital gold

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Mixed signals for OMCs in third quarter, gas companies stand out, says IIFL’s Harshvardhan Dole

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The third quarter earnings season for Oil Marketing Companies (OMCs) is anticipated to be a mixed bag. While the performance of some companies on a sequential basis may be disappointing, others may do well.

Harshvardhan Dole, Senior Vice President Institutional Equities at IIFL, shared his outlook on industry dynamics and the factors that could influence the sector’s upcoming quarterly (October-December) results.

Dole noted that the microenvironment for OMCs in the third quarter was less favourable than the previous year as well as the second quarter. Factors such as weakened gross refining margins (GRMs) and a moderation in marketing margins could contribute to disappointing QoQ figures for the sector, both downstream and upstream.

However,  given a lower base, the performance should be impressive if you evaluate on a standalone basis.

Dole points out that city gas distribution companies, such as Indraprastha Gas Limited (IGL) and Gujarat Gas, are poised to report a reasonably good quarter. He anticipates that gas utilities, especially in the City Gas Distribution (CGD) segment, will experience reasonable volume growth and an uptick in margins.

GAIL (India), he believes, is not a straightforward play on Liquified Natural Gas (LNG) due to its multifaceted business structure. While the core natural gas transmission business is expected to remain steady with 3-4% volume growth and tariff revision benefits, uncertainties loom over the commodity and petrochemical businesses.

The decline in margins in these segments, both sequentially and YoY, pose challenges, and the hope is that GAIL can source gas competitively to surprise the market positively.

Disclosure: Network18, the parent company of CNBCTV18.com, is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

Also Read | OMC stocks gain as Hardeep Singh Puri asserts no possibility of reducing fuel prices

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Gold rises ₹130 to ₹63,280 per 10 grams, silver slumps ₹300

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Gold prices rose ₹130 to Rs 63,280 per 10 grams in the national capital on Friday amid a jump in precious metal prices globally, according to HDFC Securities.

The yellow metal had closed at ₹63,150 per 10 grams in the previous trade.

Silver, however, slumped ₹300 to ₹76,000 per kilogram.

“Spot gold prices in the Delhi markets are trading at ₹63,280/10 gram, up Rs 130 taking cues from overseas markets,” Saumil Gandhi, senior analyst of commodities at HDFC Securities, said.

Meanwhile, in the futures trade, February contract of gold climbed ₹541 to ₹62,329 per 10 grams on the MCX.

Also, March contract of silver jumped ₹695 to ₹72,049 per kg on the exchange.

In the international markets, gold was trading higher at $2,038 per ounce, while silver was down at $22.92 per ounce.

Amid rise in global geopolitical uncertainties, the demand for gold as a safe haven asset has increased among investors, Gandhi added.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

NDC chief forecasts 5-10% growth in natural diamond market in 2024

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

David Kellie, CEO of the Natural Diamond Council (NDC) estimates 5-10% growth in the natural diamond market in India in 2024. Kellie highlighted India as the fastest-growing market for natural diamond jewellery globally, attributing it to the high adoption, particularly among young women.

While there are no official numbers, Kelle said the significant investments, expansion in number of retailers, and the overall aspiration among consumers indicates a good growth.

While reiterating his commitment to promoting natural diamonds, he acknowledged the emerging role of lab-grown diamonds in the global market.

Read Here | Diamonds Are Forever: South India sees spike in demand due to falling prices, younger customers

The US is a primary market for lab-grown diamonds, he said, adding that their prominence is increasing in major retail chains like Walmart and Pandora.

Kellie pointed out to the significant price difference of nearly 80 to 90% between natural and lab-grown diamonds. This price discrepancy, he suggested, creates a clear differentiation in the market, catering to different consumer preferences.

Kellie said lab-grown diamonds have a distinct market with its own unique consumer base.

Also Read | Senco Gold plans to increase diamond share in jewellery sales

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Basmati prices decline as Red Sea conflict affects export demand

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The Red Sea conflict has hit demand for Indian Basmati rice exports resulting in a fall in prices by around 5-6%,  Pankaj Goel of All India Rice Exporters of India (AIREA) said in a conversation with CNBC Awaaz.

Leading shipping companies are avoiding the Suez Canal route amid Houthi attacks. Nearly 15% of the global trade is routed through the Suez Canal.

Goel said the freight rates have shot up nearly seven times for deliveries to Europe, the US, and the Gulf regions since the conflict began leading to demand disruptions.

He pointed out that this year the production of Basmati rice has been higher by around 10-15%. So, prices are unlikely to firm up much.

India, he said, exports nearly 4.5 million tonne of Basmati rice every year with bulk of the exports going to Iraq and Saudi Arabia. AIREA is working to expand the exports to other rice consuming countries such as Japan where non-basmati is currently preferred. In the domestic market, however, the consumption of non-basmati rice is higher.

In 2011, India overtook Thailand to become the world’s largest rice exporter. Until mid-November 2023,  India exported nearly $3.38 billion worth of basmati rice.

During the second half of 2023, India imposed export bans on non-basmati white rice and other trade restrictions, leading to a sharp price in global rice prices. The Indian government also imposed a minimum export price (MEP) of $1,200 a tonne on basmati exports to cool down domestic prices. However, this was later cut to $950 after complaints that exports were becoming unviable.

According to a World Bank Global Commodity Outlook report released in October 2023, rice prices in August and September 2023 reached the highest levels since the 2007-08 food price crisis. While prices have now started cooling off, they continue to be at multi-year highs.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Industry experts foresees continued surge in India’s jewellery sector in 2024

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The Indian jewellery industry, valued at approximately 7 lakh crore, has been on a consistent growth trajectory, overcoming challenges and capitalising on emerging opportunities. In 2023, the sector experienced record-high gold prices, corrected diamond prices, geopolitical tensions, and increased global central bank buying for investment purposes. Despite fluctuations, the industry witnessed higher values, outpacing volumes in several quarters.

As the jewellery sector gears up for 2024, industry leaders like Saurabh Gadgil, CMD of PNG Jewellers, express optimism about sustained growth. Gadgil attributes the positive outlook to the role of weddings as a key driver of jewellery sales. He anticipates a strong first quarter, fuelled by an expected surge in weddings, projected to exceed 35-40 lakhs.

According to Milan Chokshi, Founder & CEO of Moksh, 2024 is poised to be a stable and potentially better year than its predecessor. Chokshi highlights the industry’s consolidation and its evolution into a more seasonal business.

He notes a shift in consumer behavior, with a new wave of buyers seeking jewellery for its design, brand, and label appeal. This shift presents a significant opportunity for retailers, prompting many to plan new store launches to cater to the evolving preferences of the Indian consumer.

Against the backdrop of significant national events, including the inauguration of the Ram Mandir in Ayodhya, the upcoming budget, and elections, experts foresee stability in the market. With strong consumption trends and a focus on design and brands, the consensus is that 2024 holds promise as a very good year for the Indian jewellery industry.

Watch this video for more.

Also Read | Senco Gold plans to increase diamond share in jewellery sales

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Alcoa to curtail output at Australian Alumina plant to cut costs

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Alcoa Corp. is preparing to announce that production will be curtailed at one of its three Western Australian refineries as the top US aluminum producer begins to reckon with cost-cutting measures.

Alcoa will curtail its Kwinana alumina refinery sometime this year, according to a person familiar with the decision who asked not to be identified since they aren’t authorized to speak publicly about the matter. The Kwinana curtailment will not be a closure, the person said, noting that the facility is producing at about 80% capacity.

Kwinana was the first of Alcoa’s three Western Australian alumina refineries and has been operating for about 60 years. The plant employs about 860 workers and 320 contractors and has the capacity to produce about 2.2 million metric tons of the raw material, according to Alcoa. The West Australian earlier reported that the company expected to shut the plant.

The move comes at a time when Alcoa has struggled with operational and permitting setbacks in Australia for bauxite, a key feedstock for the refineries. The company also said it now plans to mine lower-grade bauxite in Western Australia until it gets to its next mining phase, which analysts at Jefferies have said will be until 2027.

Alcoa’s decision will come a few months after new Chief Executive Officer William Oplinger told analysts on an earnings call that company executives consider Kwinana a “marginal asset,” and that they would consider various options on its fate, “including curtailment or closure.”

Kwinana accounts for about 1.2% of global output of alumina, based on global data from the London-based International Aluminium Institute.

The price of alumina is up more than 10% since the beginning of December, according to data from SMM International. Alcoa’s stock fell for a second consecutive year in 2023, though it rebounded more than 26% in December after the company won conditional permission for its bauxite mines in Western Australia to keep operating.

Alcoa said in October that it initiated job cuts at the plant and that it was taking a $6 million charge related to “employee severance costs to be paid through the first quarter of 2024.”

The changes comes just months after the more-than century-old producer abruptly announced that Oplinger would replace Roy Harvey as CEO. Oplinger, in his first call with analysts as the top chief, declared a focus on “cultural change” to include faster decision-making, operational tweaks and performance improvements.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Crude prices dip: What should you do with oil and gas stocks?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Probal Sen, Energy Analyst at ICICI Securities, shared his outlook for oil, and on stocks in the oil and gas space.

According to Sen, Gujarat Gas is likely to maintain its strength over the next few months. The stock’s performance hinges on the propane versus gas dynamic, with recent propane price upticks to $610-620 a tonne. This, coupled with softening LNG prices to $15-15.50, bodes well for Gujarat Gas in terms of price competitiveness. However, Sen advised investors to sell into the rally, citing murkiness in long-term prospects from a volume perspective.

Petronet LNG, he noted, operates as a price taker in the volatile oil and gas market. While remaining positive on the overall sector, he noted that softer prices act as a benefit for most companies in the space.

Sen continues to be positive on oil marketing companies (OMCs) such as Hindustan Petroleum Corporation (HPCL). He highlighted the government’s clear message of no urgency for significant fuel price hikes. This stance, along with decent refining margins and strong marketing, positions HPCL favorably from a two to three-year perspective.

Sen projected a robust 14% year-on-year (YoY) improvement in the earnings before interest, tax, depreciaton, and amortisation (EBITDA) and an 8% YoY improvement in profit after tax for Reliance Industries (RIL).

On Monday morning, Brent crude was marginally down at $78.67 a barrel, while US West Texas Intermediate crude futures shed 0.1% to $73.71 a barrel.

For more, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow