Impact on commodity sector

Budget

NDTV Correspondent

Friday, February 29, 2008 (New Delhi)

Indian Finance Minister Palaniappan Chidambaram presented the federal Budget for 2008/09 on Friday, the fifth and final full one of the Manmohan Singh government before the general elections due for May 2009.
In the Budget, the government has expressed its determination to be self-sufficient in food grains. This will be helpful for sustaining the growth of Indian economy. The Ministry of Agriculture has estimated the total output of food grain in 2007-08 to be 219.32 million tonnes, which will be an all-time record.
From the point of view of the commodity sector, most of the small farmers should get the leverage of their debts being waived. Chidambaram has announced that the government will waive debts of small farmers. Farms up to 2 hectares will have a complete waiver of loans. The debt waiver scheme will cover 500 billion rupees of loans.
This loan waiver move is expected to benefit small farmers. All agricultural loans disbursed by scheduled commercial banks, regional rural banks and cooperative credit institutions up to March 31, 2007, and overdue as of December 31, 2007 will be covered under the scheme.
In the Budget, Chidambaram has allocated Rs 500 crore in 2008-09 for a Micro Irrigation Scheme, which will cover 400,000 hectare of agricultural land.
National Horticulture Mission covering 340 districts in 18 States and two Union Territories, will be provided Rs.1,100 crore in 2008-09.
500 soil testing laboratories are to be set up during the Eleventh Plan with government assistance of Rs.30 lakh per laboratory; there is going to be a one-time allocation of Rs.75 crore to the Ministry of Agriculture in order to provide one fully-fitted mobile soil testing laboratory each to 250 districts of the country.
Special Purpose Tea Fund for re-plantation and rejuvenation will be provided Rs.40 crore in 2008-09; similar support to cardamom, rubber and coffee; crop insurance scheme for tea, rubber, tobacco, chilli, ginger, turmeric, pepper and cardamom are to be introduced. This will be helpful for re-plantation and developing the existing plantation.
National Plant Protection Training Institute at Hyderabad will be converted and upgraded into an autonomous National Institute of Plant Health Management.
National Agriculture Insurance Scheme (NAIS) will be continued in its present form for Kharif and Rabi 2008-09. Rs.644 crore is provided for the scheme. The scheme assures insurance for the crop under Kharif and Rabi. Also the Weather Based Crop Insurance Scheme implemented as a pilot scheme in selected areas of five States is to be continued; Rs.50 crore provided for this purpose in 2008-09.
The government will continue to provide fertilizers to farmers at subsidized prices; Proposals to move to a nutrient based subsidy regime and alternative methods of delivery being examined.
But the proposal to introduce a transaction tax in Commodity Futures Trading, on the same lines as STT on options and futures, may affect the turnover of commodity exchanges.
It would be an additional burden for everyone involved in commodity future trading as the government has proposed increasing short-term capital gains tax to 15 percent

 

 

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Rise Of Gold, A Long Term Decline For The Greenback

Gold prices trekked higher Thursday, touching a record $970 an ounce as an inflationary combination of high oil prices and a falling dollar pointed investors to the relative safety of precious metals.

 

Other commodities traded mixed, with silver extending its highest gains since 1980 and wheat futures retreating further from record territory.

 

Soaring oil prices, a weak dollar and growing worries that the U.S. economy is sliding into a recession have fed investor appetite for gold, which traditionally is seen as a safe haven from inflation and economic uncertainty because it's known for holding its value.

 

Gold rose nearly 32 percent in 2007 and has gained more than 13 percent so far this year.

 

Also weighing on investors were comments Thursday by Federal Reserve Chairman Ben Bernanke, who told Congress in a second day of testimony that rising inflation was complicating the central bank's job.

 

Bernanke hued to his message that the Fed stands ready to lower its benchmark interest rate to boost the economy, putting further pressure on the dollar and boosting the allure of precious metals.

 

"You have an almost perfect storm for a bull market in precious metals," said Michael Gross, analyst with OptionSellers.com. "Bernanke's on television and he's pretty much saying the Fed is going to continue to cut rates, and that's really pressuring the dollar and fueling the bullish fire for gold and silver."

 

Lower interest rates can boost the economy but tend to depress the dollar, encouraging investors to shift funds into hard assets like precious metals and other commodities.

 

Gold for April delivery added $5.70 to fetch $966.70 an ounce on the New York Mercantile Exchange, after earlier touching an all-time high of $970 an ounce.

 

Other precious metals also rose. Silver for March delivery added 49 cents to $19.70 an ounce after rising to a 28-year high of $19.845. Nymex copper surged to a record $3.8965 a pound before easing back to $3.87 a pound, still up 3.2 cents.

 

The dollar's steep decline against the 15-nation euro has been a major driver behind gold's advance from less than $650 an ounce in January 2007. The dollar traded lower Thursday versus the euro, which fetched $1.5197.

 

The falling dollar has also given a boost to crude prices, which rebounded Thursday as the prospect of lower interest rates brought an influx of fresh investment capital to the oil market.

 

Light, sweet crude for April delivery rose $2.56 to $102.20 a barrel on the New York Mercantile Exchange after rising to a new record of $102.35.

 

Other energy futures also rose Thursday. March gasoline futures added 0.27 cent to $2.4804 a gallon, while March heating oil futures rose 4.71 cents to $2.8182.

 

 

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Coal prices may set new record on Asian demand

Banpu Pcl, Thailand’s biggest coal miner, expects prices of the raw material to set new records as demand growth in Asia, led by China and India, outpaces supply.

India will raise purchases at a faster pace in the next two years, compared with 2007 and 2008, as the nation completes power plants, Philip Gasteen, head of marketing and logistics, said during the McCloskey Group coal conference in Singapore yesterday. Indonesia, the world’s second-biggest thermal coal exporter, is promoting coal-fired power output to cut oil use.

Benchmark prices at Newcastle, the world’s biggest export harbor for thermal coal in Australia, dropped $4.71 to $134.45 a metric tonne in the week ended February 22 after four weeks of records, according to the globalCOAL NEWC Index.

Prices had climbed after heavy rains in Australia, power shortages in South Africa and snowstorms in China cut output.

“Things got tighter because of growth,’’ Gasteen said in the interview. China’s export ban after the nation’s worst snowstorms in 50 years will pull 8 million tonnes out of the Pacific basin during the first quarter and “is a big loss,’’ he said.

China, the world’s second-biggest energy consumer, banned coal exports so that local utilities “don’t have grounds to raise prices’’ amid government efforts to curb inflation, Gasteen said.

Vietnam’s exports Vietnam, China’s largest coal supplier, plans to reduce exports 32 per cent this year and gradually eliminate the sales to meet rising domestic demand, Nguyen Khac Tho, vice director of the Ministry of Industry and Trade’s energy and petroleum department, said February 15.

Exports may drop to a forecast 22 million tonnes from 32.2 million in 2007 and the government is recommending halting overseas shipments after 2015.

Coal producers are keeping inventories at half of typical levels of 6 to 7 per cent of annual output because of rising demand, Gasteen said. Banpu is maintaining stockpiles at about 3 to 4 percent of annual production, he said.

“Demand has been very high so producers have been shipping out higher proportions than production and not putting as much in stock ,’’ he said.

Gasteen declined to comment on prices being negotiated with Japanese customers for annual supplies starting in April.

Australian miners are seeking between $125 and $136 a tonne under one-year contracts, compared with offers from Japanese utilities to pay $110 a ton, Peter Ball, vice president for marketing at PT Bumi Resources, Indonesia’s largest thermal coal exporter, said earlier this week in an interview. In the year ending March 31, the price is about $55.

Japan is Banpu’s biggest export destination, representing 25 per cent to 30 per cent of its sales. Banpu also ships to buyers in Taiwan, Thailand, South Korea and Italy, Gasteen said.

India needs green revolution II

The Indian economy has cruised to a high growth path and for the third successive year in 2007-08, the spurt in real gross domestic product is expected to approximate to 9 per cent.

But, there is little to celebrate in the crucial farm sector. Agriculture continues to be a laggard. Going by the latest official projections, gross domestic product (GDP) originating from agriculture and allied activities is slated to decelerate to 2.6 per cent from the previous year’s 3.8 per cent. As far as this segment of the economy is concerned, inclusive growth remains only a slogan.

Perhaps, things may change for the better - and very soon. If the Union finance minister’s remarks are to be construed as straws in the wind, agriculture may receive an extra emphasis in terms of policies and resource allocations in the budget for 2008-09.

The next fiscal marks the second year of the Eleventh Five Year Plan. In the first year, we have missed the bus with the farm sector proving to be an under-performer. So, if this sector is to grow at the targeted 4 per cent per year, extra efforts are clearly called for in the remaining years of the Eleventh Plan.

The intent is there, but the big question is, will this intent be translated into reality, given the Centre’s financial crunch, the competing claims from other segments and the intractable nature of several heads of non-plan expenditure.

However, there is no mistaking the case for renewed focus on agriculture. Production has clearly not kept pace with the increase in population.

According to the quantum indices released by the Central Statistical Organisation, the net domestic product (NDP) has risen from 104.1 in 2000-01 to 158.8 in 2006-07 on a sustained basis. But, in case of the farm sector, the spurt has been very meagre - from 99.2 to 117.6 - and accompanied by a high degree of volatility.

The share of agriculture in overall GDP has declined from more than 33 per cent in 1990-91 to as low as 16.7 per cent in 2006-07. As development proceeds, the primary sector loses its primacy, but in India, the order of decline is debatable.

There are other disquieting aspects of the crisis that dogs this sector. In pulses and edible oils, imports have become deeply entrenched. In rice and wheat, the momentum has flagged; the government is obliged to undertake large-scale purchases of wheat from overseas.

Even in 2007-08, the latest data reveal, foodgrains production has peaked to 219.32 million tonnes (mt). Still, the achievement is nothing to crow about since the harvest in 2003-04 was 213 mt. In wheat, there is likely to be a marginal decline of 74.81 mt and in rice, only a fractional increase at 94.08 mt.

The implications of a stagnant farm economy are many, and grave. Our food security is under threat; the livelihood of millions in the rural heartland is affected. As demand-supply imbalances mount, shortages queer the pitch for inflation. In this scenario inflationary expectations tend to build up.

Investment in farm sector is important; but, instead of action here, we have allowed the subsidy bill to burgeon. Over a period of 1991-95 to 2001-03, investment as a proportion of GDP in agriculture has remained static at 6.69 per cent, even as the share of subsidy has risen from 5.17 per cent to7.42 per cent, according to the Planning Commission. If even a third of the subsidy outgo had been diverted to capital spending, Indian agriculture would be much different now from what it is.

The other elements of the strategy to pave the way for a second green revolution should be doubling of the irrigation cover, introduction of high-yielding varieties suited to various agro-climatic regions and toning up of the extension agency.

One budget may not work amiracle. But, if the ensuing one sets in motion a process to revitalise our agriculture, it would qualify as a watershed.

 

 

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Mango crop hopes turn sour on adverse weather

But Maharashtra production may be better than last year

---

State-wise scenario

Banganapally variety from AP could be the worst hit

In Tamil Nadu and Karnataka crop has been affected due to excessive rains, but in Kerala, it is reported to be good.

 

Chennai, Feb. 26 Adverse weather conditions, including heavy rains, have affected mango crop in Andhra Pradesh, Karnataka and Tamil Nadu, while the prospects in Maharashtra, the largest producer of the ‘King of fruits’ in the country, are bright.

On the other hand, the cold spell in North India could affect the crop, which is due late July, in that region, besides Pakistan.

“The crop situation is not encouraging in South India, mainly due to excessive rains,” said Mr Chengal Reddy, Chairman, Federation of Farmers Associations.

Mango is grown in a total of 12.30 lakh hectares and the annual production is around 11 million tonnes. Maharashtra tops in mango production, making up nearly 60 per cent of the total output. Andhra Pradesh is the second significant contributor with the State’s share being 38 per cent, while Karnataka contributed six per cent.

“This year, the crop will be less than 50 per cent in almost all parts of Andhra Pradesh,” said Mr Shekhar Raju, a grower in Chittoor district of that State.

Unusual rains

“We witnessed heavy rains during the flowering season. As a result, pollination did not take place and the total crop was affected. Andhra Pradesh witnessed unusual rains last month,” he said.

Usually, rains for mango are required in April-end or early May just towards peak of summer. “Such a rain will help the second phase of the crop,” Mr Raju said.

Banganapally variety mango, for which Andhra Pradesh is famous, could be the worst hit, and as a result, production of mango pulp may be affected, Mr Raju said.

Giving an example of the damage, he said, “Usually, we get 4-5 tonnes of mango from an acre. This time, it would be at the most two tonnes.”

While the crop in Tamil Nadu and Karnataka too, were reported to be affected, in Kerala it was reported to be good.

As regards the situation in Uttar Pradesh, Mr Raju said since mango was a late crop in that State, it would be clear only after flowering that would take place sometime in late March.

Better arrivals

Meanwhile, the new mango crop has begun to hit the market in Maharashtra, especially in Pune. The daily arrivals are reported to be 10-15 tonnes.

According to Mr Santosh Patil, Deputy General Manager of the Maharashtra State Agricultural Marketing Board, flowering had occurred in places such as Ratnagiri in two phases. “There have been a bit of climatic changes in the last two months leading to changes in flowering. The temperatures were particularly low 15 days ago,” he said.

As a result, the crop could be a little lower in the first phase but could be better in the second phase. “Overall, the crop is likely to be better than last year,” Mr Patil said.

Over 90 per cent of the crop produced in the country is consumed domestically, while the rest is used by the food industry for producing various products such as pulp, jam and so on.

Exports growing

A very insignificant portion of the production is exported.

However, production has picked up steam during the last couple of years. West Asia is the major importer of Indian mangoes. On the other hand, the US, China and Japan are the latest among the group of nations that have begun to import Indian mangoes.

The US and China allowed mango imports from India after stringent phyto-sanitary measures were followed, while for Japan, the mangoes will have to undergo vapour heat treatment before the shipment. For the US, mangoes will have to be irradiated.

Mango exports during 2006-07 were estimated at 79,060 tonnes valued at Rs 141 crore up from 69,600 tonnes valued at Rs 128 crore during 2005-06 and 53,480 tonnes valued at Rs 89 crore during 2004-05.

Meanwhile, the mango crop in Pakistan has also been reportedly affected due to the cold weather.

 

 

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Gold hits new high of Rs 12,265

GOLD adds more glitter as its prices scale a new peak in the domestic markets on the back of speculative buying. On Monday, the prices of standard gold (99.5) touched a historic high of Rs 12,500 per 10 gm. Mumbai, the largest gold market in India, also hit an all-time high of Rs 12,265, up Rs 35 over the previous close. Delhi markets saw a gain of Rs 70 as the prices reached at Rs 12,320 per 10 gm — a level not seen before. The prices jumped by Rs 75 before the metal ended at Rs 12,225 per 10 gm in Chennai.
    Reports that gold fell more than 1% in international market on Monday after the US Treasury said it was confident Congress would support the sale of some gold held by the International Monetary Fund. However, there was no immediate impact in Indian bullion markets, analysts said. In London, spot gold fell as low as $933.50 an ounce and was last traded at $937.00/937.90 and that compared with $943.70/944.50 in New York on Friday.
    However, rising prices had an cascading effect on physical demand. Sales were very thin in local markets despite the ongoing marriage season. A section of marketmen fears that if prices continue to hover at the current level, demand for gold jewellery will fall this year.
    Bullion traders said the firm international prices, which is a combined result of the US economic weakness and a slide in dollar value, are the main reason for the latest run-up. A similar firmness was also noticed in silver on sustained support from upcountry buyers after a steep rise in international prices.

Gold hits new high of Rs 12,265

 GOLD adds more glitter as its prices scale a new peak in the domestic markets on the back of speculative buying. On Monday, the prices of standard gold (99.5) touched a historic high of Rs 12,500 per 10 gm. Mumbai, the largest gold market in India, also hit an all-time high of Rs 12,265, up Rs 35 over the previous close. Delhi markets saw a gain of Rs 70 as the prices reached at Rs 12,320 per 10 gm — a level not seen before. The prices jumped by Rs 75 before the metal ended at Rs 12,225 per 10 gm in Chennai.
    Reports that gold fell more than 1% in international market on Monday after the US Treasury said it was confident Congress would support the sale of some gold held by the International Monetary Fund. However, there was no immediate impact in Indian bullion markets, analysts said. In London, spot gold fell as low as $933.50 an ounce and was last traded at $937.00/937.90 and that compared with $943.70/944.50 in New York on Friday.
    However, rising prices had an cascading effect on physical demand. Sales were very thin in local markets despite the ongoing marriage season. A section of marketmen fears that if prices continue to hover at the current level, demand for gold jewellery will fall this year.
    Bullion traders said the firm international prices, which is a combined result of the US economic weakness and a slide in dollar value, are the main reason for the latest run-up. A similar firmness was also noticed in silver on sustained support from upcountry buyers after a steep rise in international prices.

 

 

 

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Platinum Shines, Will Gold Follow Suit?

 

Natural resources markets exploded higher yesterday. Crude oil closed above the $100-a-barrel mark for the first time. And platinum's move was even more dramatic ... the price soared to a record high of $2,173!

 

Watching platinum has been like watching a missile take off. The metal's run-up has been nothing short of astonishing -- 41% so far in 2008 and about 75% in the past 12 months!

 

And as high as platinum is right now, some analysts are now calling for the metal to hit $3,000 per ounce by the end of the year!

 

I think what's happening in platinum could be foreshadowing of what will soon happen to other precious metals like gold. More on that in a moment.

 

 

First ...

 

 

What's Driving Platinum?

 

 

That's the question traders and end users are asking themselves right now. Is this a short-term blowout or a long-term shift in pricing?

 

 Robin Bhar, a respected metals analyst at UBS, recently summed up the dramatic move in platinum this way:

"It's panic, panic, panic. If you are a platinum

consumer, you are not going to sleep at night. The price move shows you the unprecedented nature of the market. People can see actual physical shortages somewhere down the road and prices moving away from them. It's not a case of just speculation. There is genuine demand coming through."

Other analysts say the platinum deficit could widen to more than 400,000 ounces by the end of 2008, compared with about 265,000 ounces in 2007. The market had a surplus of 65,000 ounces in 2006, following seven successive years of deficits. Inventories are at historically low levels.

 

There is no doubt that the supply/demand squeeze in platinum is real! Platinum prices are fueled by inelastic industrial demand as well as from investment demand. (Jewelry demand for platinum is pretty flat, and should go down as the price of the metal goes through the roof.

 

The industrial demand is for catalytic converters for diesel engines. Until very recently, platinum was the only metal that could be used for this purpose, and the number of diesel vehicles around the world is growing dramatically. In 2000, diesel accounted for only 18% of global production of light vehicles. By 2007, 24% of vehicles were diesels.

 

And while there is no platinum ETF in the U.S., there is one in Britain. The metal held by London-based ETFS Physical Platinum (PHPT on the London Stock Exchange) rose by 42,000 ounces in a week to 267,000 ounces -- an 18% climb in just one week. If growth continues at half of this recent rate, then the ETF will hold a million ounces in the fourth quarter of 2008.

 

THAT is how you get to $3,000-an-ounce platinum!

 

There Is Also a Crisis
On the Supply Side

 

South Africa produces about 75% of the world's platinum, and it is in the grips of a power crisis that is punishing the mining industry.

 

The South African state power utility, Eskom, has to build enough power plants to keep up with South Africa's growing economy and increasingly plugged-in population.

 

Power demand has increased 50% since apartheid ended in 1994 as the government provided more homes with electricity.

 

 

South Africa is also boosting infrastructure spending on roads, railways and stadiums as it prepares to host the 2010 soccer World Cup.

 

As a result, Eskom is now chronically short about 1.5 gigawatts of electrical generation (about 1 and a half good-sized power plants). Eskom expects the power outages to continue until at least 2013.

 

Eskom's solution is rolling power outages that result in about a 25% national power outage per month. In practical terms, this is a forced reduction in power usage of 10% for big users like mines. The mines were completely shuttered for five days last month!

 

This means on those days, the mines are unable to pump excess ground water from deep shafts while other maintenance programs are cut back. And how would you like to be a miner caught underground when random power cuts hit, stopping elevators and bringing ventilation to a halt? That kind of brown-out could lead to a deadly accident.

 

Bottom line: South African platinum miners were ratcheting down their production forecasts anyway, and the power outages are hastening the slide.

 

Sure, a lot more platinum is being recovered from junked catalytic converters. And new advances in fuel technology should allow palladium to substitute for up to about 25% of the platinum used in catalysts for diesel-powered engines.

 

But neither of these developments is going to completely solve the platinum crunch anytime soon. So platinum prices could go much higher.

 

More importantly ...

 

This Supply/Demand Squeeze Shows
You How Quickly Metals Prices Can Soar!
Here's Why Gold Might Be Next in Line ...

 

If $2,000 platinum is rocking the markets, imagine how shocking $2,000 gold would be? Well, we might not have to wait too long to find out.

Because the fact is, like platinum, gold has longer-term supply/demand fundamentals that are very bullish, including ...

• Global gold production fell to a 10-year low of 2,444 metric tonnes in 2007, according to Gold Fields Mineral Service. This year production will likely drop again. While China is producing more gold -- up 12% -- South Africa's output is falling off a cliff, down 8.1%.
• Exchange traded funds that hold gold are an important new force in the market. The most active gold ETF, the streetTracks Gold Shares (GLD), held 630 tonnes of gold at the end of January -- more than the European Central Bank or China's central bank. What's more, a new gold ETF in India is planned for this year, after 4 successful ETFs came into being in FY08.
• The U.S. Federal Reserve is likely going to keep cutting interest rates. This in inherently inflationary -- and inflation is bullish for gold. We're already seeing more inflation in the U.S., with producer and consumer prices skyrocketing. And now we're importing inflation from China. U.S. import prices reached a record high in January, up 1.7% -- twice as much as had been expected.

The best part is that gold hasn't really taken off yet. Let me explain ...

 

Look at the chart I made. You can see that gold is consolidating after its most recent rally.

 

I expect we could see more consolidation before gold takes off, but, when it finally breaks out, it should rally and rally hard.

 

 

 

So rather than chase platinum, I would use this consolidation to add to gold positions in anticipation of their upside breakout. That way, you're in before any meteoric rise!

 

 

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Gold glitters at Rs 12,215; silver reaches 27-year high

NEW DELHI: After breaching the crucial 12,000 mark on Wednesday, gold prices surged further to set a new record of Rs 12,215 per 10 gram in the bullion market here on Thursday.

A similar trend was also noticed in silver prices as it touched 27-year high.

Marketmen said there was no physical buying in gold prices at existing higher levels but surging trend in global markets as crude oil reaching dizzy heights raised the concerns of inflation and boosted the demand for gold.

The yellow metal reached to record at 949.20 last night on the New York Mercantile Exchange and silver gained to 17.94 dollar an ounce, the highest since 1980, they added.

Standard gold and ornaments notched up further gain of Rs 175 each to Rs 12,215 and Rs 12,065 per 10 grams respectively. Sovereign followed suit and shot up to Rs 9,700 per piece of eight gram, a level never seen before.

In the silver section, silver ready rose further by Rs 160 at Rs 22,000 per kg on firming global trend and weekly-based delivery jumped up by Rs 400 at Rs 22,840 per kg.

Silver coins rose by Rs 100 at Rs 26,200 for buying and Rs 26,300 for selling of 100 coins.

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Gold sets fresh record at Rs 12

DOMESTIC gold prices again crossed the psychological level of Rs 12,000 per 10 gm on Tuesday on speculative buying after a steep rise in global prices. But it’s not the physical demand that is driving the prices this season. Bullion traders said the firm international prices, which is a combined result of the US economic weakness and a slide in dollar value, are the main reason for the latest run-up.
And hence, the yellow metal is slowly going out of the common man’s reach as the prices are hitting new peaks each day, making the commodity almost unaffordable for the retail user.
Reports that the metal rose more than 2% to $929 an ounce in international markets pushed up the local prices. In Asia, gold rose by $6.48 to $911.68 an ounce. The dollar’s slide against major currencies was the key reason for the rush for gold in global markets, analysts said. Gold and dollar usually move in opposite directions. When the dollar declines, gold gains as an attractive alternative investment option, they added. The metal climbed to a record 936.92 an ounce on February 1.
Turning to local markets, Kolkata markets saw a hefty jump of Rs 170 as the metal settled at Rs 12,045 per 10 gm. Incidentally, it was same closing mark of February 9 when the metal had touched a life-time high of Rs 12,045. Prices shot up by Rs 110 in Chennai before ending the day’s business at Rs 11,755 per 10 gm. In Delhi, gold gained Rs 85 to end at Rs 11,840 per 10 gm. Mumbai, the major gold market in India, remained closed on Tuesday for Chatrapati Shivaji Jayanti.
A similar firmness was also noticed in silver on sustained support from upcountry buyers after a steep rise in international prices. In London, spot silver rose to $17.38/17.43 an ounce, which triggered aggressive buying in local markets, sources said.
In the spot market, ready silver (.999) became costlier by Rs 360 in Chennai before finishing the business at Rs 22,795 per kg. In Kolkata, the metal traded Rs 250 higher at Rs 21,250 per kg, while Delhi markets saw a gain of Rs 200 as the metal closed at Rs 21,500 per kg.

India may bag 2nd place for rubber products

Growth In High Potential Sectors Like Auto Industry To Push Up Demand

Our Bureau CHENNAI

    IF THE rubber sector gets adequate government support, India can emerge as the second largest manufacturer of rubber products in the world, next only to China, in the coming years. The current surge in the manufacturing sector is set to boost the
    rubber industry, both in the domestic and export segments. The average CAGR, too, is accelerating to 8% in the course of normal downstream demands within the domestic sectors of the economy that use rubber products. With rapid growth in high potential sectors such as the automotive industry, the demand for rubber may touch 10%.
    According to All India rubber Industries Association immediate past president KT Thomas, “Export-led growth could lead to cons o l i d a t e d
    growth between 12-16% sustainable till 2015, but there are key constraints that need to be addressed.”
Elaborating, AIRIA regional chairman, south, Vinod Simon, said: “Volatility in prices of natural rubber, uncertain supply situation, high import duties on natural rubber and latex and high input cost due to imposition of anti-dumping duties needs to be sorted out at the earliest. What the Indian rubber industry needs is a level playing field and, if provided, the industry has its inherent strength to grow rapidly and deliver.”
    They were in Chennai on Tuesday to outline the features of India Rubber Expo to be held in Kolkata in January 2009. The expo held in Chennai in 2007 was ranked as Asia’s largest rubber show, the world’s second largest with about 250 exhibitors from around the world. AIRIA senior vicepresident TK Mukherjee said IRE 2009 would be AIRIA’s best yet.

 

 

 

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India turns second largest cotton producer after China

INDIA has overtaken the US to become the second largest cotton producing country in the world, after China, a study by International Service for Acquisition of Agribiotech Application (ISAAA) said.
India, which was having one of the lowest cotton yields in the world, has become a net cotton exporter, potentially five million bales in 2007-08, the study said. Bt cotton was a major factor contributing to higher rate of production from 15.8 million bales in 2001-02 to 31 million bales in 2007-08, it said.
Releasing their brief on global status of commercialised biotech/gm crops:2007, Dr CP Thiagarajan, a former professor of Tamil Nadu Agricultural University, said India experienced the highest proportional increase in 2007 for the third consecutive year with a 63% gain to 6.2 million hectare of bt cotton. The income of growers in India has also increased up to Rs 10,000 or more per hectare.
The studies have shown strong farmer confidence in the crops with nine of 10 Indian farmers replanting biotech cotton year on year, ISAAA said.

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`Ban on iron ore exports will only harm domestic market'

`Ban on iron ore exports will only harm domestic market'

Special Correspondent

BANGALORE: A prominent mine owners body in Karnataka has opposed the demand made by steel producers to ban iron ore exports from the country stating that such a decision would only harm the domestic market.

Scarcity reports denied

The Bellary-Hospet Iron Ore Mine Owners Association (BHIMOSA) has termed the allegations that the iron ore resources in the country would last for only another 20-30 years as "misleading." "This alleged scarcity of iron ore in the domestic market, if the commodity was exported, have been projected by a small section of the secondary steel producers in the country and is completely different from ground reality," says Mohamad Iqbal Hothur, Secretary, BHIMOSA.

" This effort to restrict iron ore exports seems to be designed so that the Indian iron ore industry does not have an outlet or market and is forced to make iron ore available in the domestic market at depressed prices," Mr. Hothur stated.

India's iron ore reserves of 25 billion tonnes will last for more than 150 years at the present rate of domestic consumption. Besides, the expansion in mining will lead to more deposits being discovered and hitherto unusable grades of iron ore (for instance ore with 50 per cent Fe content) can now be used in steel making with advancement in steel-making technology. Further, all integrated steel plants have their captive mines and draw their supplies from them and do not depend on stand-alone mines.

" Hence, there is no question of a situation where there is a shortage of raw materials due to iron ore exports. The iron ore that is now being exported is the surplus for which there is no demand in the domestic market," he said.

India produced 165 million tonnes of iron ore in 2005-06 out of which 89 million tonnes were exported. Out of this 89 million tonnes of exports, 80 per cent were iron ore fines that do not have a demand in the domestic market since most of the steel plants are lump-based and do not use fines.

Moreover, out of the total production of iron ore in the country, 75 to 80 per cent are either natural fines or become fines due to conversion of lumps.