India remains top gold consumer

 Special Correspondent

MUMBAI: India maintained its reputation of being the numero uno consumer of gold when demand for gold reached an all time quarterly record of Rs. 30,600 crore in the third quarter of 2008 (July-September), a significant 66 per cent increase over the third quarter of 2007 as investors sought a safe haven and jewellery buyers returned to the market to take advantage of softer gold prices. Demand increased to 250 tonnes in the third quarter from 190 tonnes in the same quarter in 2007, a 31 per cent increase.

Demand

According to Gold Demand Trends, a report released out by the World Gold Council (WGC), the demand for gold jewellery in India reached 178 tonnes, a rise of 29 per cent in tonnage terms over the same period in 2007, despite a deteriorating economic situation creating a greater squeeze on consumer spending. In currency terms, this equated to a rise of 78 per cent, from Rs. 12,300 crore to Rs. 21,900 crore.

After a sluggish start to the quarter, gold jewellery demand surged driven by rural economic boom, urban consumers wanting to safeguard their investments, said the report. Much of India experienced a good monsoon rainfall, which resulted in a 'feel good' factor boosting rural spending on gold during the festive season. The data, compiled independently for WGC by GFMS Limited, shows investment demand for gold was similarly boosted by the pullback in the gold price during the third quarter.

Oils, oilseeds slip further on negative overseas advices

Agencies NEW DELHI

THE Delhi oil and oilseeds market remained depressive past week following discouraging overseas advices coupled with increased arrivals from producing centres. With the CPO (crude palm oil) in Malaysia down by $ 25 to $ 450 per tonne and Chicago soya oil futures tumbling to around 250 cent this led to nervous selling by stockists easing prices of all major edible oil on the Delhi wholesale market. According to marketmen, increased arrivals of soya seed at crushing units also had a deep impact on edible oil prices. Soya seed which was quoting at Rs 1550/1600 per quintal in producing centres fell to Rs 1480/1500 per quintal. Prices in Ratlam and Neemuch were seen quoting even lower at Rs 1375/1400 per quintal leading to sharp fall in soya oil prices. With soya oil in Indore down by Rs 350 to Rs 4000 per quintal its prices in Delhi also declined from Rs 4800 to Rs 4500 per quintal following heavy selling by stockists. Cottonseed oil slumped to a low of Rs 4050, losing Rs 250 per quintal tracking the weak trend prevailing in Punjab where cottonseed oil prices came crashing down to Rs 3900 per quintal. Sesame oil was also hit by selling pressure with prices easing by Rs 100 to Rs 4250 per quintal even as sesame seed held strong. Mustard seed slipped by Rs 25/50 to Rs 2900/3100 per quintal on weak demand.
GRAINS & PULSES
The Delhi wholesale grains and pulses market ruled mixed past week on the back of mixed signals from upcountry market centres. Tight inventory in roller flour mills appreciated mill-quality wheat Rs 56/58 to Rs 1150/1156 per quintal following spurt in demand. Atta (wheat flour) was also quoting upward by Rs 30/35 at Rs 620/625 per 50 kg on heavy buying by local stockists and retailers. Wheat bran firmed by Rs 20 at Rs 430/450 per 50 kg on increased offtake by upcontry centres. Fine rice 1121 average quality held steady at Rs 5900/6000 per quintal, while rice steam was quoting at Rs 6500/7000 per quintal end week. According to marketmen, sustained arrivals of fine paddy at mills in Haryana eased Paddy grade 1121 from Rs 3000/3100 to Rs 2800/2900 per quintal.
NON-FERROUS METALS
The Delhi non-ferrous metals market observed mixed trends past week. While Nickel and Tin closed firm in tune with the LME (London Metal Exchange) trend copper, brass and aluminium incurred losses. Nickel Russian Plate spurted by Rs 20 to Rs 765/775 per kg on hectic buying by stockists and speculators as nickel on LME rose from $ 11550 to $ 11578 per tonne. Inco nickel was also quoting upward by Rs 10 at Rs 865 per kg. Lead desi soft and hard edged up by Re 1 to Rs 86.50 and Rs 85/89 per kg following firm LME lead which moved up by $ 40 to $ 1332 per tonne. Brass parts, huny scrap and sheet tumbled by Rs 7/8 to Rs 183, 186 and Rs 184 per kg respectively amid increased arrivals from Pune and Hyderabad.
CHEMICALS
All major chemicals ended weak on the Delhi chemical market past week following restricted demand from consuming industries. Formic Acid tumbled by Rs 30 to Rs 68 per kg on lower import booking rate coupled with weak demand. Acetic Acid was down Rs 5 at Rs 45 per kg, while Chinese Sodium Hydrosulphite eased by Rs 3 to Rs 75 per kg. With the import booking rate of Citric Acid down from $ 1200 to $ 875 per tonne its prices in Delhi fell by Rs 100 to Rs 3200/3300 per 50 kg. According to marketmen, prices may ease further by Rs 50/100 per 50 kg in view of ample supplies and weak demand. Sodium Sulphate moved down by Rs 500 to Rs 11500 per tonne on easing rae material prices. Hydrogen peroxide and Zinc oxide also went down by Rs 4/5 to Rs 24/29 and Rs 85/105 per kg on lack of demand. Phosphoric acid fell from Rs 98 to Rs 80/85 per kg amid sustained supplies. Thiourea and chromic acid also sought lower margin with prices dipping by Rs 20/25 to Rs 210 and Rs 250 per kg. Polyvinyl Alcohol and Sodium Benzoate also ended negative on lack of demand.
SPICES & DRYFRUITS
The Delhi spices and dryfruit market observed mixed trends past week. Red chilli pala, packing and fulcut rose appreciably by Rs 500/1000 per quintal with prices reaching a new high of Rs 5800/6000, 6800/8500, 8000/9500 on heavy buying by stockists. According to marketmen, lower estimates of red chilli production in producing centres of Madhya Pradesh and Andhra Pradesh owing to deficient rains flared up prices by Rs 200/500 per quintal in the producing centres following tight stocks. Consequently, prices in Delhi were also quoting upward amid lower inventory, they said. Red chilli phatki also went up from Rs 2300 to Rs 2500 per quintal on buying support. Turmeric bold finger held strong at Rs 6200 per quintal. Gum Nigerian Talu and white edged up by Rs 10/20 to Rs 135/145 and Rs 279/290 per kg following hectic buying by stockists from Rajasthan, Haryana and Punjab with daily trading amounting to 500-600 bags. Gum Nigerian Sankh also held firm at Rs 400/425 per kg. Prices are expected to move further up by Rs 20/25 a kg in view of the tight stock position.

Commodity traders stare at big losses

Sudden Drop In Prices Catches Importers, Exporters Off-Guard

Sugata Ghosh & Deepa Krishnan MUMBAI

 COUNTLESS Indian traders have been trapped by a brutal commodity market. Consider these examples: A small-time importer in Coimbatore is fighting bankruptcy after placing an order for two shiploads of iron scrap. By the time the cargo reached India in little over a month, prices had crashed 70%. His buyers have backed out and the man is facing a Rs 100-crore loss. Across the state border, cashew kernels which have reached Kerala from Ivory Coast are piling up. The kernels have to be processed for re-export. But there's a problem: many overseas buyers are no longer interested since prices have dipped. In Mumbai's chemical mart, a sulphur importer is refusing to lift the cargo from the port. In less than two months, prices have crashed from $700 a tonne to $65, and he has nobody to sell to.
    These aren't isolated instances. Across the spectrum of commodities — scrap, iron ore, sulphur, solvents, dyes, soda ash and even edible oil — local traders have been caught on the wrong foot. There are instances where importers have preferred to pay the penalty rather than pick up stocks from docks at a price which they can't recover.
    Some of them, like the Coimbatore-based scrap trader, are picking holes in the shipping and letter of credit documents to wriggle out of the contracts. A few are even willing to surrender the collaterals to banks with whom they had opened letters of credit.
    "The drop in price was sudden. Sulphur importers who had booked consignments in advance are finding no takers," said Chandrakant Sanghvi, a liaisoning agent in Mumbai.
    Many exporters are also firefighting. Some iron ore exporters have now discovered that their Chinese buyers have disappeared with prices dropping to $55 a tonne from last year's high of $135. Crash in commodities hits importers, exporters alike
    "A MONTH ago, Chinese buyers had asked for a steep cut in price and some even went back on contracts. But there have been some negotiations of late," said Rahul Baldota of MSPL, a large exporter.
    The impact is being felt even in relatively smaller items. Ravi Adukia, an exporter of dye intermediates, said that his Korean and Taiwanese clients are pushing for discounts. "In 45 days, prices have dipped from $1,700 a tonne to $1,100. To maintain the relationship, I may have to lower the price."
    With local buyers unwilling to honour commitments, some fear the pile-up of cargo is a logistical disaster waiting to unfold. Nearly 45,000 tonne of edible oil is lying idle in custom-bonded tanks. Of this, about 7,000-8,000 tonne is in JNPT. "Not even 10% of these have been lifted. Some cleared their stocks on rumours of a duty hike that is currently at 7.5%," said Jayant Lapsia, president of the All India Liquid Bulk Importers and Exporters Association. Local edible oil is proving cheaper, he added. Palm oil — India's primary edible oil import — had been witnessing heavy import defaults since June when the price rose sharply. Even though the price eased in October, matters have improved little.
    Exporters have realised that many of their overseas buyers have not hedged by offsetting positions at the London Metal Exchange which they used to do previously. This is because most commodity futures brokerages have stopped giving exposure limits due to the financial turbulence. The drop in prices, coupled with the crash in shipping freights — as reflected in the Baltic Freight Index touching a 5-year low — has lowered the landed price of hundreds of commodities.
    Familiar echoes ring out across sectors. Minesh Shah, president of All India Plastic Dealers Association said: "In the 30 years of my career, things have never been worse. Since the last batch of imports, plastic prices have shrunk by half. We are having to sell our goods at losses, and will not import till demand picks up." The price of polyvinyl chloride is down to Rs 36 a kg from Rs 73 in July, polypropylene is down to Rs 45 a kg from Rs 115. The landed price of PP is down to $650 a tonne from $2,200.
    Metals, which have hit multiyear lows in a matter of months, are seeing importers running for cover. Surendra Mardia, president of industry body Bombay Metal Exchange in Mumbai said: "Traders are helpless. Some have mopped up funds just to honour commitments to save their international image. Others have been unlucky. Banks are not allowing them to withdraw even funds coming in as payments," he said.
    Chemicals like acid slurry and soda ash, used in detergents and soaps, have seen a decline of nearly 30% in price in two months. Acid slurry (Linear alkyl benzene sulphonic) is currently quoting at $1,500 a tonne, down from $2,300. Sanjay Trivedi, head of Oil Technologists Association of India said: "The sudden decline in input costs may have caught the bulk importers unawares but this is temporary."
    sugata.ghosh@timesgroup.com 

Inflation rises again to touch 10.72%

New Delhi: Halting the fiveweek downward streak, inflation on Thursday inched up to 10.72% on account of rising prices of essential commodities like vegetables, pulses and cereals, and some manufactured items. After declining to 10.68%, inflation rose by 0.04 percentage points for the week ended October 25 even as prices of edible items including rice, wheat, potato, tea, butter and salt firmed up.
    "Inflation of 30 essential commodities (taken together) marginally increased to 7.51% as on the week ending October 25, 2008, from 7.47% reported in the earlier week,'' a finance ministry statement said, adding that prices of six out of 30 items increased during the week.
    Although the index of the 'fuel and power' group remained unchanged, the primary articles group index increased to 11.41% as compared to 10.92% a week ago, the statement said.
    Commenting on the inflation figure, Crisil principal economist D K Joshi said, "The declining trend would continue. The spike in inflation this week is just an aberration.'' AGENCIES

Creative bug bites farmers in Gujarat

Seeds Of Exotic Fruits & Vegetables Imported From Japan, Taiwan

 FARMERS in entrepreneurial Gujarat are increasingly turning innovative. It all started with the production of Taiwanese Papaya at village Limbdi in Surendranagar, traditional bananas in Jamnagar (in Saurashtra's barren land) and very recently Japanese watermelon in Vadodara. The experiments don't end here.
    The farmers are now importing musk melon from Taiwan, brinjal-sized tomato from Japan and egg-sized brinjal from Africa. While seeds of musk melon are being imported from Taiwan at rate of Rs 32,000 per kg, Japanese tomato is being imported at Rs 10 per seed and brinjal seeds at a rate of Rs 70,000 per kg.
    Brinjal is being experimented in Limbdi (Saurashtra), Vadodara and Dhoraji (Saurashtra).
    The unique feature of this brinjal is that it has more disease resistant power compared to traditional crop, said Jitu Patel, an agro-tech expert.
    One kg of brinjal seed is enough to cater to 5 acres. For instance, only 100 gram of seed is adequate to cover production in five acre. Against an investment of Rs 20,000 (including the cost of Rs 10,000 towards seeds and other inputs like fertiliser, power, water etc.), the farmers can get an assured return of Rs 3.50 lakh on a plot of five acres, Mr Patel said. The brinjal crop is likely to be ready within 10 days in Dhoraji (Rajkot district).
    Similarly, tomato (brinjal shaped) seed Rs 10 (per seed) imported from Japan can produce 20 kg of tomato per plant and the duration of crop ranges between 75 and 90 days. Its shelf life is longer and plant strength is higher than the traditional one. The unique feature of this imported tomato seed is that the production is available round the year (maximum shelf life of plant is one year).
    Musk melon cultivated in an acre can give a production of 10 tonne. An investment of Rs 16,000 (including the cost of seeds Rs 8,000 and Rs 8,000 towards fertiliser, power and water) can fetch an income of Rs 1 lakh, Mr Patel added. The musk melon constantly remains in demand in northern parts of the country.

Rough road ahead for Indian diamond players

THE Indian diamond industry, that was hoping for a semblance of recovery in exports ahead of Christmas, is bracing itself for rough times. A poor demand from the US and Europe — India's largest jewellery importers, a fluctuating currency and volatile gold price have added to the problems.
    Some large integrated diamond manufacturers like Suashish Diamonds are tackling the situation through moderate inventories, but many small and medium-sized units may have to slash production. Gopal Laddha, CFO of Suashish Diamonds, said: "We plan our inventories according to the demand, so we have not suffered so far. However, many from the industry are having to
cut down manufacturing because there
is no demand, and the price of rough diamonds is also high."
    While some primary diamond producers have agreed to lower the price of rough diamonds, others like DTC are yet to announce price cuts. The high price, along with expensive credit from banks to purchase rough diamonds, has been eroding the manufacturing profits.
    Mehul Choksi, MD of Gitanjali Group that has a large retail network both in US and India, says that the lack of demand has brought down the prices by 35-50%. This is bound to come into effect soon. "Once the price of roughs decline, the manufacturing profits of Indian units would improve," he said.
    According to data released by the Gem and Jewellery Export Promotion Council (GJEPC), between April and September imports of rough diamonds had grown 19% over the previous year's. This was largely due to the zero duty import structure, said Sanjay Kothari, former chairman of the council.
    During the same period, exports of polished diamonds have grown despite the slowdown by nearly 22%. In value terms, the exports were to the tune of Rs 33,519 crore, due to higher price of diamonds. However, the exports will be slack till, feel traders.
    Jewellery, though a low margin industry, accounts for nearly 20% of the total Indian exports and employs over a million people. With the economic situation becoming dire around the globe, most of the jewellery exporters who looked at tapping alternative markets in Middle East and Asia earlier, are now going slow.
Gold sparkles again
MUMBAI: Gold recovered some of its overnight losses in the domestic market on Wednesday as some investors shifted their funds to safe haven assets after a steep fall in equity prices. In international markets, yellow metal came under selling pressure as the dollar recovered some lost ground against the euro after Barack Obama won the US election and with hopes that change in the presidency would be positive for the economy. In Mumbai, pure and standard gold firmed up by Rs 125 and Rs 120 to Rs 11,810 and Rs 11,745 per 10 gm respectively. In London, spot gold fell to $745.60/747.00 an ounce from $763.20 in New York on Tuesday.

Delay in cane crushing sweetens sugar

West Bengal, Madhya Pradesh & Rajasthan Look To Maharashtra Due To Higher Prices In UP

THE delay in sugarcane crushing in Uttar Pradesh has driven states like West Bengal, Madhya Pradesh and Rajasthan to turn to Maharashtra to meet the demand. This has pushed up the spot price of sugar in Maharashtra. In the futures market, there has been a rise in the open interest — the outstanding buy and sell positions — of the most active contract.
    A higher state advised price (SAP) in UP has lowered demand from millers, who have moved the court against the state government. Millers feel that the SAP is very high and the state government has fixed it arbitrarily without taking into account the losses they suffered in the past couple of years when prices crashed due to good production. The Allahabad High Court is likely to hear the matter on Thursday.
    Meanwhile, crushing is on in Maharashtra. Of the 173 mills, 22 mills till Tuesday crushed 500,000 tonnes of cane, producing 50,000 tonne of sugar at 9% recovery. The state is likely to produce around 60 lakh tonnes of sugar this year, at an estimated recovery rate of 12%.
    "Good demand from Maharashtra is coming from several states including the eastern states that buy sugar from Uttar Pradesh and this has firmed up the ex-mill price in the state," said Maharashtra State Co-operative Sugar Factories Federation MD Prakash Naiknavare,
    The ex-mill sugar price (S-30) which excludes excise duty, is up Rs 25-30 at Rs 1,620-Rs 1,625 per quintal since last week. The price of medium sugar (M-30) hovers between Rs 1,650 and Rs 1,655 per quintal. Mr Naiknavare feels prices can further increase by Rs 25 this month, touching Rs 1,675 in December.
    Sugar prices are also up on the futures exchanges, with price of Sugar M200 December contract on NCDEX up by almost 5% to Rs 1,849 per quintal on Wednesday as against Rs 1,763 on October 29. During the same period, volumes of the same contract moved up to 26,000 tonne from 5,780 tonne. Amol Tilak of Kotak Commodity Services said that the price will further increase due to delayed crushing, retail demand and overall low production. "December contract should touch Rs 1,866 levels by next week," he said.
    nidhi.sharma1@timesgroup.com 

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