Here’s how major commodities are likely to perform in 2017
Forecasting commodity markets for 2017 will depend largely on four main likely drivers. After a largely stellar year in 2016, the outlook for major commodities is likely to come down to the actions of Donald Trump, FED, the Chinese government and OPEC. CRUDE OIL There is considerable uncertainty around the outlook of the implementation of the Opec agreement, which, if carried through, will undoubtedly impact oil markets. A modest recovery is projected for most commodities in 2017, as demand strengthens and supplies tighten. Opec’s ability to affect oil prices is likely to be tested by the expansion of oil supply from unconventional sources, including shale producers. In particular, there are concerns that Opec members may not stick to their commitments, that demand will underwhelm – or, more pressingly, that rising prices will trigger a surge in production in the US. However, there is now a sense that the market is returning closer to balance, helped by American Petroleum Institute (API) data last night estimating US crude stockpiles dropped by more than four million barrels last week. In general, however, the market remains optimistic on supplies going into 2017 after the deal between Opec and other world producers, including Russia, to cut global output by 1.8 million barrels a day. Even the news that Libya, one of several Opec members exempted from the cuts, has doubled output to 600,000 barrels a day failed to dampen trader spirits too much. Coal prices surged 30 per cent, reflecting strong import demand and tightening supply in China following restrictions on production aimed at reducing pollution. U.S. natural gas prices jumped more than 33 percent due to strong demand for air conditioning, falling production, lower injections into storage, and increased exports to Mexico and to South America during the southern hemisphere winter. On September 28, Opec agreed to limit crude oil output to 32.5-33.0 million barrels per day, effectively ending two years of unrestrained production. This marked an important policy shift, especially for Saudi Arabia, the organization’s largest producer. Opec, the only surviving commodity organization seeking to influence markets, guiding global oil prices will be challenging in the presence of unconventional oil producers, notably the US shale oil industry. The US crude oil rig count peaked at 1,609 in October 2014. In contrast, it hit 316 in the week ending May 27, 2016-the lowest level since the 1940s. The US drilling activity fell due to lower crude oil prices. The lower prices were due to oversupply. The US crude oil rig count has risen by 109 rigs from the lows in May 2016. The big test then is whether higher prices provide another boost to US shale producers. As such, markets will also scour the US figures for signs the count of drilling rigs is picking up pace, which could suggest a production surge to come. On the technical front, we see prices of NYMEX WTI, hitting $62-63( MCX: 4000-4,200) levels and then grinding lower from there back to $50. But, we believe anything below $45 ( MCX: 3,000) could evoke another round of cuts, which could potentially take prices to the mid $70’s (MCX: 4,800-5000) again. GOLD & SILVER I find myself more pessimistic for bullion going into 2017 and never felt like this even during last year this time around when prices hit a six year low after the announcement of rate hike. But, gold retraced higher subsequently, thanks to weak stock markets and doubts over further hikes. Very similar announcement of a rate hike was made this month as well, but the difference is that, it is accompanied with negative fundamentals for gold. When we describe fundamentals for gold, it is to do with consumption and production. Production has been on the rise and consumption declining rapidly in the large consuming countries, India and China, with China also being a largest miner of gold. India as a country has more trust in adornments, than other asset and it is reasonable to expect demand to suffer more till the first half of 2017, as Indians have to get used to buying gold officially. However, in a country where the appetite for gold is insatiable, demonetization may have slowed down the gold demand only for a couple of quarters and we feel the demand will be back on track and so will the gold imports. Looking back in 2016, gold received a kicker since the beginning of the year, after reaching its nadir right towards the end of 2015, where it sank to around $1 050/oz. But what appeared to be a rapidly deteriorating economic environment characterised by negative interest rates in many developed countries, has led the yellow metal to rise by almost $300/oz or slightly above 20% since the start of the year. By the middle of the year predictions of $1500-$1900 started appearing from many of the reputed banks and institutions across the world purely based on hope that the FED might not hike rates for long period of time. Something like Brexit did not evoke the kind of reaction that is normally expected of gold and then came the trump shock taking any bullish meat left in gold. Since then, prices have fallen for six straight weeks, the worst streak in a year, as prospects for higher US borrowing costs damped demand for gold, a for a zero yielding asset like gold. Markets don’t seem too optimistic about the outlook for 2017. Hedge funds cut their bets on a rally to the lowest since February, while outflows are ramping up from exchange-traded funds. Where do we see the price of gold going in 2017? Given that stock markets, are becoming very bullish, gold could loose its safe-haven appeal. In the early days of 2016, markets were driven by fear, which is the reason gold rallied so strongly, but that has changed recently. Add to it Eurozone woes, the never-ending doubts over the fate of the Italian banking system, and general concerns over the health of the global economy. More
Reliance Commissions New Paraxylene Plant at Jamnagar on Reliance Founder’s Day
Reliance Industries Limited (RIL) has announce commissioning of the first phase of Para-xylene (PX) plant at Jamnagar, Gujarat. The plant with capacity of 2.2 MMTPA is built with state-of-the-art crystallization technology from BP which is highly energy efficient and environment friendly. With the commissioning of this plant, RIL’s PX capacity will more than double from 2.0 MMTPA to 4.2 MMTPA. “Commissioning of the new PX plant marks beginning of the culmination of a series of projects including the refinery off-gas cracker, ethane import project and petcoke gasification. These projects are part of the largest contemporary investment, in excess of Rs. 100,000 crore, in Refining and Petrochemicals sector anywhere in the world. Our projects are on schedule and at an advanced stage of mechanical completion. The new PX capacity takes us a step closer to being among the top 10 petrochemical players globally. This is a fitting tribute to our visionary Founder Chairman Shri Dhirubhai H. Ambani,” said Mukesh D. Ambani, Chairman and Managing Director, Reliance Industries Limited. Reliance Industries Limited (RIL) is India’s largest private sector company, with a consolidated turnover of INR 296,091 crore (US$ 44.7 billion), cash profit of INR 40,737 crore (US$ 6.1 billion) and net profit of INR 27,630 crore (US$ 4.2 billion) for the year ended March 31, 2016. The move comes on the birth anniversary of Reliance’s Founder Chairman Padma Vibhushan Shri Dhirubhai H. Ambani. On commissioning of entire PX capacity, Reliance will be the world’s second largest PX producer with 9% of global PX capacity and 11% share of global production. The new PX capacity will add value to the output from refineries and improve the profitability of the Jamnagar complex. PX is the building block for the entire polyester chain. The new capacity will complete the integration within Reliance’s polyester value chain, leading to improved margins and also strengthen its position in polyester industry globally. RIL is the first private sector company from India to feature in Fortune’s Global 500 list of ‘World’s Largest Corporations’, currently ranking 215th in terms of revenues and 126th in terms of profits. RIL ranks 238th in the Financial Times’ FT Global 500 list (2015) of the world’s largest companies. RIL ranks 121st on the Forbes Global 2000 list (2016), continuing to be the top-ranked Indian company. RIL’s activities span hydrocarbon exploration and production, petroleum refining and marketing, petrochemicals, retail and telecommunications. Peyton Barber Womens Jersey
Rs 1 lakh crore investment in solar power, green corridor on government’s energy radar for 2017
Green seems to be the catchword for the government heading into the next year as it gears up to achieve 175 gigawatt of clean energy by 2022 through auction of 1,000 MW of rooftop solar power, Rs 13,000 crore investment in solar parks and a Rs 21,000-crore package to boost local manufacturing of panels. By all yardsticks, 2016 remains a watershed year when solar tariff slumped to Rs 4 per unit and wind projects received a major thrust. The government is set to switch gears in 2017 to make India a hub for one of the largest installations of clean energy sources by 2022. Minister for New and Renewable Energy Piyush Goyal offered a glimpse of things to come while speaking to PTI. Scaling up of rooftop solar programme, scheme to encourage domestic manufacturing of solar panels and making wind power affordable through auction of sites all fill up a packed 2017. His ministry has in its sight Rs 1 lakh crore investment for the sector and is looking at 20 GW of power generation from non-conventional sources in 2017-18. Beginning with speeding up the tempo for solar panel installation at homes, schools and hospitals through subsidies in 2016, plans are afoot to expand the rooftop programme to government buildings by providing target-based incentives. In the November auction of 500 MW, subsidies for installation of as much as 432.7 MW of rooftop solar capacity were lapped up by 122 developers. A fresh tender for one gigawatt (1,000 MW) is now in the works. The Prime Minister Narendra Modi-led government is eyeing generation of 100 GW from solar power alone by 2022. Rooftop solar capacity almost doubled to 1,000 MW in 2016 and the aim is to take this to 40 GW. Also on the table is a green corridor to transmit 2,000 MW of power from 34 solar panels across 21 states. For good measure, Goyal said, a scheme to promote domestic manufacturing of solar panels will become a reality in 2017. The Rs 21,000-crore module aims to create 5 GW of photovoltaic manufacturing capacity by 2019 and 20 GW by 2026. India’s renewable energy generation capacity stands at 45 GW. According to Goyal, wind power is up next after successful reduction in solar tariff through transparent auction of sites. A mobility scheme is on the anvil to achieve 100 per cent electric vehicle-based transportation for India by 2030, he said without giving out specifics. Early next year, the ministry will organise Global RE- Invest 2017 India-ISA Partnership, the second edition of the bi-ennial Renewable Energy Investors Meet and Expo to bring in investors. The event will build on RE-Invest 2015 and explore the advances to help meet India’s ultimate target of adding 175 GW renewable energy capacity by 2022. The ministry is keen on fostering competition among players, particularly in the wind energy space, to bring down tariff and make it a viable source of electricity for consumers. The Global Renewable Energy Investors meet is the world’s largest renewable energy investors gathering to be organised in 2017, Goyal said. He spoke of launching renewable energy fund under the National Investment and Infrastructure Fund (NIIF). The ministry has been working on this USD 2-billion fund to make private players invest in the sector. In 2017-18, the government is eyeing 20,450 MW power capacity addition from renewables, including 15,000 (solar), 4,600 MW (wind), 750 MW (biomass) and 100 MW from small hydro power (of up to 25 MW). A total of 7,518 MW of grid-connected power generation capacity from renewable sources has been added this year (January to October 2016). In 2016-17, a total of 1,502 MW capacity has come on board till October-end this year, making a cumulative realisation of 28,279 MW. Now, in terms of wind power installed capacity, India is placed at the 4th rank after China, the US and Germany. As for solar power, a total of 1,750 MW capacity has been added till October-end this year, making it a cumulative 8,728 MW. After bringing solar tariff to a record low of Rs 3 per unit, the minister indicated making wind power affordable. He said, “There will be a wind auction to transparently reduce the tariff.” The government has planned solar energy from every roof in the country and there will be expansion of rooftop solar programmes next year. It has envisaged 40 GW of solar power from rooftop alone out of the total 100 GW planned to be added by 2022. This flows from the need to push rooftop solar in a big way against the backdrop of a target of 40 GW grid connected solar rooftops by 2022. So far, about 500 MW of rooftop solar has been installed and about 3,000 MW has been sanctioned for installation. All major sectors like the Railways, airport, hospitals, educational institutions, government buildings of central, state and PSUs are being targeted, besides the private sector. A massive Grid Connected Solar Rooftop Programme will be launched with 40 GW target. State Electricity Regulatory Commissions of 30 states/UTs notified regulations for net-metering and feed-in-tariff mechanism. Besides, funding of Rs 5,000 crore was approved for solar rooftops. A total sanction of USD 1,300 million has been received from the World Bank, KFW, ADB and NDB which will enable SBI, PNB, Canara Bank and IREDA to fund such projects at an interest rate of less than 10 per cent. The ministry has tied up with ISRO for geo-tagging of all the rooftop plants using ISRO’s VEDAS portal. To reduce import of solar equipment from other countries, particularly from China, the ministry is keen to encourage domestic production to meet the huge power demand. The minister said there will be focus on Make in India for solar power next year and a scheme to this effect may be launched. The government has also planned launch of founding conference of International Solar Alliance. About use of renewable in farm sector, he said, “We will focus on Prosperous Farmer — Pollution Free India. There
IGI high: 50 lakh flyers a month
By the end of this December, IGI is all set to become the first airport in the country to serve over 50 lakh flyers in a month. The airport operator, Delhi International Airport Ltd (DIAL), said the travellers included both domestic and international travellers flying in and out of the Indira Gandhi International Airport. DIAL also said that among the highest travelled places from the airport, Dubai remained on top among international destinations while Mumbai topped the domestic chart. “By December 31, we will witness the highest number of passengers ever recorded in a month at any airport in the country. The data shows the airport’s efficiency in handling heavy passenger traffic and offering the best services,” said an airport official. DIAL CEO I Prabhakara Rao said the operator was excited about handling so many flyers in one month. “These are indicators of positive growth in the aviation industry, which is already growing at 20%. DIAL aims to set new standards—from the best on-time performance to highest flight movements. Breaking own records is a healthy habit and we hope to carry forward this tradition to 2017.” In the 2015-16 financial year, a record 4.84 crore passengers travelled through the Delhi airport, a record that will also be crossed this fiscal year. “In November and May 2016, the airport catered to 49.6 and 47.5 lakh flyers, respectively,” the operator said. The airport has reached an average of 1,185 air traffic movements a day, which is also a record. “On an average, the number of daily air traffic movements IGI handles is the highest in the country. We are growing at a rapid pace and are already counted among the 25 busiest airports in the world. Efforts to match the rise in numbers with adequate infrastructure and services are being made constantly,” a DIAL official said. IGI Airport provides access to more than 100 destinations around the world. “It connects to 127 destinations worldwide and is a hub for several major airlines,” DIAL said. Derek Sanderson Jersey
On ‘win-win’ runway, aviation no more rich man’s tarmac: Union Minister Ashok Gajapathi Raju
Indian aviation is no more a rich man’s prerogative and growth will continue on high trajectory in the new year, Union Minister Ashok Gajapathi Raju said as the sector saw the much-needed reforms taking off in 2016 with new policy and ambitious regional connectivity plans. 2016 bloomed as a “very meaningful year” with over 20 per cent domestic air passenger growth while scrapping of the once famous ‘5/20’ overseas flying norms and relaxing of FDI rules added to the sector’s mojo. Turning operationally profitable in the last fiscal provided the much-needed impetus to Air India amid stiff competition among domestic carriers in 2016 even as they reaped benefits of lower oil prices — a scenario unlikely to remain the same next year with changing geopolitical vibes. Against this benign backdrop, passengers have a lot to cheer with airlines — from budget to full-service ones — coming up with discounted ticket prices as they look to fill more seats even as many ancillary services come at a price. Also, biometric access for passengers has been tested at Hyderabad International Airport while tag-free hand baggage system is being tried at various airports. As Civil Aviation Minister Ashok Gajapathi Raju remarked about the aviation sector, “It is a win-win situation.” All said and done, the sector’s trajectory had its share of air pockets with the abrupt sacking of Airports Authority of India (AAI) Chairman R K Srivastava as well as confusing signals over possible capping of air fares, an issue that has lost steam. As the year wound down, this week’s incident of 15 fliers getting injured after a Jet AirwaysBSE 1.58 % flight veering off the runway at Goa airport and two planes coming close to collision at the Delhi aerodrome stoked concerns over safety. Buoyed by high passenger growth numbers and headway in bridging the skill gap, Raju described 2016 as a “rather significant and a very meaningful year” for the aviation sector. Asserting that flying is “no more a rich man’s prerogative”, Raju, known for keeping a low profile and speaking his heart, said more people are flying and that India is the world’s largest growing aviation market. “Things are much better than what they were. Of course, the scope for improvement is a continuous process. Wherever you are, there is always scope for improvement,” he told PTI in an interview. “This growth is not going to be for eternity… Once you reach your levels, there will be a flattening out of growth, but India has scope for growth and we will continue to grow. There is no reason why we should not grow,” he noted. After years of much back and forth, the government in June finally came out with the much-awaited and talked-about national civil aviation policy. The framework, rolled out for the first time since Independence, seeks to propel sectoral growth across segments — airlines, airports, cargo and MRO (maintenance, repair and overhaul), to name a few. In addition, various measures for improved ease of doing business and passenger-friendly ways are there. Seen as a millstone for the new-age domestic airlines, 2016 saw the government doing away with the ‘5/20’ norm whereby only those carriers having five years of operational experience and minimum of 20 planes were allowed to fly overseas. Paving the way for more foreign funds inflows into the aviation space, non-airline players can put in up to 100 per cent FDI in local carriers. At the same time, UDAN (Ude Desh Ka Aam Naagrik) — the ambitious regional connectivity plan to make flying more affordable by connecting unserved and under-served airports — is in the air with the wow factor. The scheme, most likely to practically take wing next month, would see fares being capped at Rs 2,500 for one-hour flights. But on the flip side, a levy of Rs 8,500 per flight on busy routes to fund the regional connectivity scheme has ruffled feathers of established domestic players even as the government is targeting long-term benefits. Staying with passengers, the government revised the compensation upwards for flight delays and cancellations, apart from rolling out digital complaints filing system — AirSewa — with the promise of speedier redressal. For the first time in 10 years, flag carrier Air India posted Rs 105 crore operational profit for 2015-16 while its subsidiary and international budget arm, Air India Express also flew into the black by making a net profit of Rs 361.68 crore in the previous fiscal. The airline also created history by launching the world’s longest flight on the Delhi-San Francisco route over the Pacific Ocean. The Naresh Goyal-promoted Jet Airways, which saw an accident at the fag end of the year after its Boeing 737 plane skidded on the runway at the Goa airport just prior to take off for Mumbai, moved its European gateway to Dutch capital Amsterdam from Brussels after nearly nine years of operating flights from the Belgian capital. During the year, budget carrier IndiGo became the first Indian airline to operate the fuel-efficient A320 Neo plane while its peer GoAir became eligible for international operations as it inducted the much-needed 20th aircraft, an Airbus A320 Neo, into the fleet. It also received government’s permission to fly to nine international airports, including Iran and Uzbekitan. 2016 also saw a new regional airline — Air Carnival — taking off while Air Pegasus was forced to ground its operations. The latter’s flying permit has also been suspended by aviation regulator, DGCA. Around the same time, Air Costa shed its regional tag and joined the league of pan-India operators as DGCA granted it national operator’s permit. The slugfest between Tata Sons and Cyrus Mistry, who was unceremoniously removed as Chairman at the salt-to-software conglomerate in late October, brought the alleged irregularities at no-frills carrier AirAsia India to the fore. Tatas hold 51 per cent stake in AirAsia India and the rest is held by Malaysian budget airline AirAsia. Mistry alleged that there were fraudulent transactions worth Rs 22 crore in AirAsia India, prompting
Toll plaza crisis worsens after demonetisation
Despite the mounting protest against the toll collection at Paliyekkara after demonetisation, the dormant attitude of the district administration has drawn criticism. Day by day, activists of various political parties have been intervening in the long queues there and forcibly opening the toll gates for free passage of vehicles which invited complaints from the toll company management. In a petition by the toll company against the Youth Congress activists and Puthukkad SI for opening the toll gates during peak traffic for free passage, the management had alleged more than Rs 2.75 lakh revenue loss during December 14 to 17. It also alleged that various political parties brought a revenue loss of over Rs 1.93 lakh to the company. “Long queues and subsequent protest by passengers have become a daily phenomenon here and yet no one took the initiative to solve the issue. Considering the peak season of tourists and Sabarimala pilgrimage, the district administration should have addressed the issue here,” said DCC vice-president Joseph Tajet, who collected information on the toll company’s complaint on revenue loss through Right to Information Act. He added that if the revenue loss calculated by the company gets the nod, then the 20-year agreement would be a huge loss to the common tax payer. The UDF had submitted a petition to the PWD minister, district collector, rural SP and human rights commission addressing various issues at the toll plaza, but so far the authorities have done little to resolve these issues. Thomas Vanek Authentic Jersey
Expressway lenders to meet on plan to restart toll
Lenders of the Delhi-Gurgaon expressway project are scheduled to meet on January 4 to discuss legal options for a proposal being prepared to restart toll collection at the cities’ border even as the NHAI maintains there is no such plan. Millennium City Expressways Pvt Ltd (MCEPL), the company that operates and maintains the speedway, had told TOI on Wednesday it was preparing the proposal. Though sources said MCEPL had been asked to do so by the highways authority, there is no official communication from NHAI to MCEPL. Neither is there any official record of a meeting in the NHAI headquarters where the issue was discussed two weeks ago. Sources said everything is happening in an “informal” manner. They admitted any plan to resume toll collection draw huge public anger and NHAI will find it difficult to come out in support of any such move. The 32-lane Sirhaul toll plaza, on the expressway at the border of Gurgaon and Delhi, was scrapped in February 2014 on the orders of the Delhi high court after the NHAI and lenders agreed to it. On the latest proposal, an official, who did not wish to be named, said, “Under no circumstances can the NHAI approach the court. So, the present operator and lenders are taking the lead to explore options to approach the court. NHAI cannot cite no revenue from the project as a reason to reopen the case, but MCEPL and lenders can move an application as they are losing out on their investment.” Sources said the talk of restarting toll collection gained momentum due to increasing demand from local commuters and industries operating from Manesar to remove the other toll plaza on the expressway, at Kherki Dhaula. The Haryana government is in favour of this and had even proposed buying out the project. The state was keen to scrap the toll plaza before it the golden jubilee celebrations of Haryana began on November 1. But it did not materialise. Next Wednesday, experts will discuss legal aspects if they are to approach the court for permission to restart toll collection, sources said. Moreover, rebuilding the toll plaza is expected to cost around Rs 1.5 crore. The plan under preparation envisages completing toll plaza construction in six months if the proposal goes through. “Around 18 legal partners from the banks will meet on Wednesday to discuss how the matter should be presented in court. The first clearance has to come from the banks and legal partners because we do not want to waste time and money,” said a senior MCEPL official. One of the reasons that may be cited before the court to resume toll operations is NHAI’s loss of Rs 1 crore a month, its revenue from the Sirhaul toll plaza. Another logic would be that the commuters crossing Kherki Dhaula toll plaza are being made unfairly made to pay more to compensate. The toll fee charges from cars in February 2014 was Rs 26 per trip at Sirhaul toll plaza. After it was removed, this fee was hiked at Kherki Daula toll plaza. As a result, commuters who were initially paying Rs 33 at Kherki Daula are now paying Rs 60. Brad Daugherty Authentic Jersey
Shirdi airport: Maha to allot land to IOC for aviation
To make the Shirdi airport functional at the earliest, the Maharashtra government today decided to allot land to Indian Oil Corporation (IOC) for setting up aviation fuelling point. The decision was taken at the 57th Meeting of Board of Directors of Maharashtra Airport Development Company Limited (MADC) here. State Chief Minister Devendra Fadnavis is the Chairman of MADC. “Many decisions taken to make Shirdi Airport functional at earliest;allotment of land to @IndianOilcl for setting up of aviation fuelling point,” the Chief Minister’s Office tweeted. “Extension of terminal building,extension of runway from 2500m to 3200m, parking & other infrastructure were some other important decisions taken,” it added. Arian Foster Authentic Jersey
Mumbai: City airport data on our performance is wrong, says IndiGo
Long delays while flying in and out of Mumbai have been a sore point with passengers for years. But now the issue on-time performance (OTP) has become a bone of contention even between the choked airport and airlines operating from there too.Some carriers are alleging that they are being wrongly shown as being less punctual at Chhatrapati Shivaji International Airport—where all airlines record lowest on time performance (OTP) among the metros (see box)—according to monthly data issued by the Directorate General of Civil Aviation (DGCA).Budget airline IndiGo has questioned OTP monitoring by Mumbai International Airport Pvt Ltd (MIAL) and complained to the DGCA on this issue on Tuesday.The airline has accused MIAL of monitoring in a way that shows some ‘competing airlines’ as more punctual than they may be in reality.While IndiGo’s USP for long was its punctuality, in recent months, the regulator’s monthly data for OTP of domestic flights shows that other airlines overtook it on this front many times. For instance, in November, IndiGo was at number four—after SpiceJet, Jet and Vistara. Roman Josi Authentic Jersey
Airports authority of India sets ball rolling on new airport roads
The Airports Authority of India has started working towards developing three new roads to the Lohegaon Airport in a bid to decongest the existing roads. Recently, Sanjay Prakash — the DIG in charge of the western zone of Central Industrial Security Force — visited the airport on an inspection and expressed concerns about the traffic congestion. Last week, airport director Ajay Kumar said the AAI is working towards new road projects. “Currently, the Pune Municipal Corporation is in the process of acquiring land for main approach road — the proposed 30-metre DP Road from Sanjay Park to Airport Parking No.1. Land acquisition is on for another road, connecting Lunkad property to 509 Chowk. This road will act as diversion for the vehicles coming from Vimannagar, and going toward Vishrantwadi, Dhanori and Yerawada, and vice versa,” Kumar added. Demaryius Thomas Jersey