It’s full steam ahead for Tinplate

The stock of Tinplate Company has been the darling of investors for the past few trading sessions. It made a whopping 17 per cent gain on Wednesday, thereby taking its total return in one month to around 34 per cent, much higher than close to five per cent rise seen in the case of ET Metal Index.

For investors, it is quite obvious to ponder what to do with this stock, given the fact that many a time stocks within the small- and mid-cap space rise to new highs in a few trading sessions. Not to forget about market manipulations and stock rigging by promoters, among others.

Thankfully, in case of Tinplate, a Tata Group company, investors need not worry about such things. Rather, they should find out the steam left in this particular stock.

The company, Tinplate, manufactures tin plates, which are largely used in food packaging industry. In a developing country like India, use of tin plate in packaged foods is still at a nascent stage. The per capita tin consumption in India is only 0.3 kg compared to 1 kg in China and 8-12 kg in developed nations.

Tinplate, being the market leader, is likely to benefit from the rising demand for packaged foods from urban population and increasing use of tin plates in packaged foods. The gradual rise in confidence about the growth of Indian economy has been clearly reflected in stock price of Tinplate Company for the past several months.

Also, the company gets 25-30 per cent of its revenue from exports and the recent signs of a recovery in global economies have improved investors’ confidence about the company’s future earnings.

While there are signs of a demand uptick for its products, the company is on track to expand its production capacity by 2 lakh tonnes, a rise of more than 50% in production capacity of its finished products.

In October, the company announced installation of equipment for this proposed expansion plan. All these events have fuelled the stock price movement.

Before the 27 per cent rise in stock price this week, the stock was trading at a forward price-earning multiple of close to 6. This appears to be lower, considering its historical P/E multiple of 8-12.

However, this week’s rise in stock price has raised its P/E multiple close to 8. But if the economy continues to grow at this pace, it is bound to reach higher P/E multiples and will offer good return.

(Source : Economic Times, India)

Japanese TMBP and Tinplate export prices up in Q1 of 2010

TEX reported that Japanese integrated steelmakers have firmed up most of their export deals of TMBP and tinplate with successful price increases slightly beyond USD 100 per tonne each for shipments to Asian destinations in the January to March quarter of 2010. As a result, the new prices agreed are estimated at levels of USD 900 per tonne FOB for TMBP and USD 1,150 per tonne FOB for tinplate.

In Asia, there are fairly strong demands for TMBP and tinplate. In fact, the Japanese steelmakers enjoy all time highs in their negotiated exports of tin mill products to Asian destinations for October and December shipments this year. By comparison, local demands usually fall by 10% or so from a quarter ago in the January and March quarter of each year due to the lunar New Year holidays.

But the Japanese steelmakers' export volumes under contract so far for January and March shipments in 2010 compare with what they have negotiated for shipments in the quarter before. As a result, it follows that Asian destinations have more demands for Japanese exports than a usual year. Tinplate demand indicates marked growth of demand for beverage cans, particularly in China. As to other nations, there are signs of an expanding tinplate demand for sanitary cans such as tuna cans.

China's Baosteel Company has opted to keep its domestic tinplate prices unchanged for shipments in the January and March quarter of 2010 contrary to earlier speculation that the company would price up tinplate in strong domestic demand. Also, Baosteel has served notice on a domestic price increase of CR sheets by CNY 550 per tonne for January shipments. In this connection, the company's decision to keep tinplate prices unchanged is thought to have stemmed from the policy for an enlarged share of domestic sales whereby Meishan Steel Company will bring its tinplate production on the right track. Meishan, a Baosteel subsidiary, operates its tinning line capable of producing 200,000 tonne per year of tinplate at its works. Meanwhile, it is understood that Baosteel's CR sheet price increase for January shipments is intended to put pressure on small and midsize tinplate manufacturers whose operations are based on bought in materials, thereby forcing them to pull out. Accordingly, there is a possibility that Baosteel will increase its tinplate prices for February or March shipments if its pricing measures prove successful.

The Japanese steelmakers admit a certain influence from Baosteel's flat tinplate prices on the price increases the Japanese steelmakers want to achieve in their deals of tinplate exports to Southeast Asia. If a major difference has arisen between Japanese and Chinese tinplate prices, Chinese export offensives of tinplate for Southeast Asia will follow, market sources forecast. On their part, the Japanese steelmakers claim to have exercised moderation in their requirements of a price increase as to Southeast Asian deals of tinplate exports for January and March shipments in 2010.

(Source : TEX Report)

Chinese Tinplate import from different countries - Jan '09 - Nov '09

Russian crude steel output increases 56.5 percent in November

According to the data released by the Russian Federation's Federal State Statistics Service, in November this year Russia registered a 56.5 percent increase year on year in its crude steel production to 5.4 million metric tons - down 2.8 percent month on month.

During the month in question, Russia produced 3.9 million metric tons of pig iron and blast furnace ferroalloys - up 66.8 percent year on year, but down 4.4 percent month on month, 4.3 million mt of billets - up 71 percent year on year and down 4.1 percent month on month, 2.4 million metric tons of long products - up 38 percent year on year and down 7.1 percent month on month, and 1.9 million metric tons of flat rolled products - up 87.4 percent year on year and down 6.4 percent month on month. The above flat rolled production figure includes 600,000 metric tons of cold rolled - up 67.4 percent, and 1.3 million metric tons of hot rolled - up 99.6 percent, both compared to November 2008. Meanwhile, the country's November output of pipes saw a 45.7 percent increase year on year to 598,000 mt - down 5.2 percent month on month. 

In addition, in November this year Russia produced 492,000 mt of rolled products from low-alloy steel - down 1.9 percent, 275,000 mt of coated sheet and tinplate - up 50.8 percent, 43,600 mt of cold rolled steel strip - up 59.9 percent, 47,900 mt of bent-steel sections - up 11 percent, and 25,300 mt of wire rod - up 20.9 percent, all compared to the same month last year.
 
On the other hand, in January-November this year, Russia's output of crude steel went down by 17.6 percent, its pig iron and blast furnace ferroalloys production decreased by 13.4 percent, its billet output dropped by 8.5 percent, its long product output fell by 16.6 percent, its flat rolled product output declined by 8.8 percent (including a 15.5 drop in cold rolled and a 5.4 decline in hot rolled production), its pipe production went down by 19.5 percent, its output of rolled products from low-alloy steel decreased by 48.5 percent, its coated sheet and tinplate production went down by 15.4 percent, its cold rolled steel strip output declined by 42.2 percent, its bent-steel section production dropped by 32.9 percent, and its output of wire rod decreased by 35.5 percent, all compared to January-November 2008.

(Source : SteelOrbis)

Kazakhstan issues Jan-Nov steel production data

According to the data released by the Republic of Kazakhstan's Agency of Statistics, in the first eleven months of 2009 the country registered a 7.6 percent decrease in its crude steel production but a 4.1 percent increase in its production of flat rolled steel (including a 5.4 percent growth in galvanized steel and a seven percent increase in tinplate), all compared to the data for January-November 2008. The respective figures in metric tons were about 3.74 million and 2.73 million (including 528,700 for galvanized steel and 180,410 for tinplate).
 
During the first eleven months of 2009, Kazakhstan's output of ferroalloys declined by 14.1 percent year on year to 1.318 million mt.

(Source : SteelOrbis)

Krakatau to sell 20% stake in Latinusa via IPO and 55% share to Nippon Steel consortium

Indonesian state-owned steel producer PT Krakatau Steel has announced its intention to sell about 20 percent of shares in its tin plate producing subsidiary PT Pelat Timah Nusantara (Latinusa) via an initial public offering (IPO) to be held on December 7-8 this year.

As a result of the sale of 504 million shares in Latinusa, Krakatau Steel plans to receive about IDR 159-204 billion (approx. $17-21 million). "All funds from the IPO will be used for Latinusa's reconstruction project and for the acquisition of new equipment, in order to increase the plant's efficiency and product quality, and to raise the production capacity from the current level of 130,000 mt to 160,000 mt per year," Latinusa's managing director Ardhiman T.A. said, adding that the shares will be listed on the Indonesia Stock Exchange on December 14, 2009.

Meanwhile, on November 12 this year, with the objective of attracting the robust tinplate demand in Asia, the Japanese steelmaker Nippon Steel Corporation formed a consortium with Mitsui & Co Ltd, Metal One Corporation and Nippon Steel Trading Co Ltd.  The Nippon Steel consortium signed a share purchase agreement with Krakatau, by which the consortium will acquire 55 percent of total issued shares of Latinusa for $59.95 million, counting after the initial public offering. With Nippon Steel's 35 percent holding representing a controlling stake in the consortium, Latinusa is expected to become a consolidated subsidiary of Nippon Steel.

"Setting sights on capturing the expanding demand for tinplates in Indonesia by enhancing the competitiveness of Latinusa through stable supplies of substrates and technical assistance, Nippon Steel intends to strengthen its tinplate business in the growing market in Asia by securing a manufacturing base in Indonesia, in addition to the production bases located in Japan and two Nippon Steel Group companies overseas, namely China-based Guangzhou Pacific Tinplate (PATIN) and Thailand-base Siam Tinplate (STP)," reads Nippon Steel's statement.

After the IPO and stake purchase, Krakatau Steel will own a 20.10 percent stake in Latinusa. Meanwhile, Nippon Steel Corp. will own 35 percent, Mitsui Co. will own ten percent, Nippon Steel Trading five percent, Metal Ore five percent, the public 20 percent, and the private company PT Baruna Inti Lestari will hold 4.9 percent.

In 2009, Latinusa expects its tin plate product sales to reach 90,000 mt, rising to 120,000 mt in 2010.

(Source : SteelOrbis)