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Market round-up: Cement consumption to rise 3-4.5 % in FY18

LiveMint logoLiveMint 27-04-2017 Livemint

The government’s thrust on infrastructure and road sector spending is likely to be the key driver of cement demand in fiscal year 2018 (FY18), said a report by CARE Ratings. Thus, cement consumption would witness a growth of 3-4.5% during the year, which translates to 285-290 million tonnes of total consumption during the fiscal year.

However, the rating agency added that while the government’s “Housing for all” initiative, especially in rural areas, would partially compensate for otherwise sluggish activity in the real estate sector, overall demand from the housing segment for cement may see some decline during the year. The housing sector alone constitutes two-thirds of the total consumption of the building material at present. Also, it should be noted that capacity utilization is low with excess capacity already in place across regions in India and rising input costs may put pressure on the producers’ margins. The rating agency expects cement makers to take price hikes over the course of the year and pass on the burden of rising costs to customers.

Rising US shale oil output puts Opec cut at risk

Shale oil output in the US is rising much faster than expected and gaining market share globally, increasing the risk of a “volume war” with the Organization of the Petroleum Exporting Countries (Opec) and weaker oil prices, the founder of oil and gas consultancy Rystad Energy said.

Rystad Energy expects US shale oil output to grow by 100,000 barrels per day (bpd) each month for the rest of this year and into 2018 if oil prices hold around $50-55 a barrel, well above estimates by the US Energy Information Administration for monthly gains of about 29,000 bpd in 2017 and 57,000 bpd in 2018. Fast-growing shale oil output is adding to the dilemma faced by Opec and other non-Opec countries like Russia as they consider whether to extend output cuts into the second half of this year or boost volumes in a bid to regain market share. Reuters

Euro turns from riskiest to everyone’s favourite

What a difference a week can make. Perceived as the riskiest currency on the planet until Sunday’s French election, the euro is suddenly everyone’s favourite. Goldman Sachs Group Inc. expects the euro to gain almost 4% after the first round of the vote delivered all that investors hoped for.

Pacific Investment Management Co. has a “more constructive” view on the currency and Nomura Holdings Inc. has recommended buying it. BlackRock Inc. and JPMorgan Asset Management favour European shares amid reduced political risk, while BlueBay Asset Management has already added to holdings. Investors are more bullish on European assets as risks of a victory for anti-euro presidential candidate Marine Le Pen recede, reducing the odds of a political upset similar to Brexit and Donald Trump’s victory. French polls, which got the first-round results right, now see centrist Emmanuel Macron becoming president. The rising optimism contrasts with option prices before the 23 April vote, which were the most bearish for the euro than any other currency. Bloomberg

Graphic: Naveen Kumar Saini/Mint

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