Pakistan Metals_Copper and Scrap remain strong amid decline in other industrial metals (AKD Daily, Dec 09, 2021)
AKD Daily
Pakistan Metals: Copper and Scrap remain strong amid decline in other industrial metals
- CRC-HRC spreads have started to shrink, currently trading at US$100/ton as compared to a high of US$142/ton and an avg. of US$128/ton in Nov’21. Major decline is attributable to 15% reduction in CRC prices to US$857/ton vs an avg. of US$893/ton in Nov’21 owing to policy tightening in China to limit exports.
- International aluminum/zinc/lead prices have started to retreat, contracting 17.3/14/10.3%MoM as of 7-Dec’21 after swelling by 28/30/11% in 4MFY22 , depicting early signs of metal commodities upcycle losing stream amid energy concerns and gradual decline in overall demand.
- On the flipside, scrap and copper prices have sustained their momentum where FYTD avg. prices currently stand at US$473/ton and US$9,488/ton, respectively. Scrap/copper prices are currently trading at US$460/9,556/ton. Due to both metals being central to net zero emission campaign, the prices have sustained the elevated levels where robust EV demand and US$1trn infrastructural bill passed by congress should continue to keep copper prices at elevated levels.
- In light of recent global events, copper and rebar-scrap margin remain firm which bodes well for both ASTL (TP: PkR58/sh, 40% upside) and MUGHAL (TP: PkR140/sh, 56% upside) where the stocks are currently trading at FY22 P/E of 5.1x/4.8x while on PEG basis, ASTL and MUGHAL are trading at 0.18x/0.16x.
AKD Research
Mughal Iron & Steel Industries Ltd. Mughal Iron & Steel Industries Limited is engaged in manufacturing and trading of mild steel products. The Company is engaged in producing steel in the long-rolled steel products, which has a capacity of 688,000 metric/tons of re-rolled steel per annum. The Company is engaged in multidimensional activities from making billets of mild steel, spring steel, deformed bar, re-bar, cold twisted rebar and a range of sections, such as I-beams, L-sections, C-section, H-beams and T-bar. The Company offers its products under various categories, including Smelting, such as Ferro Silicomanganese, Ferro Chrome and Ferro Silicon; Billet, such as Mild Carbon Billets, Spring Steels, Austentic Stainless Steel, Ferrite Stainless steels and Alloys Steels; Bars, including Deformed Bars, Re-inforcement Bars and Thermax Bars; Beams, including I Beams (Girders), Angle Section (L Section), T Bar (T section) and C Channel, and Grade and Specifications, including ASTM A 615 G-40 and ASTM A 321.
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AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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