Rising coal, crude prices will hurt corporate earnings, profit margins: UBS

HONG KONG: Profit margins of Indian companies will be under pressure as rising coal prices force them to pass on the increase in cost to customers, according to commodity analysts present at the UBS APAC Journalist Forum in Hong Kong. UBS expects thermal coal's contract price to remain above $100 per tonne over the next one year.

"Domestic prices for coal in India is still 20-25% lower than international prices," Peter Hickson, global basic materials strategist, UBS, told ET on the sidelines of the conference. "But then, even a small increase will affect the bottom lines of cement, power and steel companies, which use coal in a big way."

Demand for coal in India has grown at 9% a year for the past five years. The country, along with China, will play an important role in driving up global coal prices. India expects power coal usage to rise from 400 million tonnes to 600 million tonnes by 2015. Apart from coal, crude prices will also play a major role in the corporate earnings of Indian companies. Analysts expect the effect of oil prices to start showing on the earnings from the April-June quarter.

"We're not sure where oil prices are headed," Mr Hickson said. "In normal circumstances, we expect crude prices to hover at $85-90 per barrel level but there are many concerns. The crisis in Gulf countries, tight supply environment and steady demand will keep crude prices firm."

Problems in Japan , volatile west Asia and "slower" economic activities in China could have an impact on the overall commodity prices. Crude oil, platinum, phosphate, lead and palladium are on the 'preferred commodity list' while nickel, steel, uranium and aluminium have fallen out of favour - at least in the short-term - for most commodity analysts.

"Cost curve will be up for most commodities over the next few years," said Andrew Ferguson, CEO of APAC Resources . "It'll not be excess liquidity alone that will keep commodity prices up; demand-supply gap and high cost of extraction will add to the overall prices. Raising interest rates to control commodity price inflation will not bring about a big change in prices."

Copper prices are likely to be governed by China's seasonal restocking, which should last till May. The recent spike in steel prices in US and Europe is largely driven by an increase in seasonal activity, low steel inventories and raw material cost-push. Analysts are worried that key-end markets like construction, infrastructure and real estate have not contributed much to the demand for steel.

Gold prices may benefit from lingering European Union sovereign debt concerns, rising inflation fears and the West Asian crisis. "Gold prices will be firm this year. We do not expect a sharp spike up, but a gradual rise in prices. I am bullish on gold as an asset class," said Mr Ferguson.

source:http://economictimes.indiatimes.com/markets/analysis/rising-coal-crude-prices-will-hurt-corporate-earnings-profit-margins-ubs/articleshow/7840309.cms

GLOBAL: What international students want to study

Predicting where future international students will come from and what subjects they go abroad to study has become a mini-industry in receiving countries such as Britain and Australia, where some courses are highly dependent on overseas student fees.

Delegates and experts at the British Council's Going Global conference, held in Hong Kong from 11-12 March, agreed that demand for overseas courses from Asian students will carry on rising.

"Overall demand for international education will continue to grow in the low single digits in the next decade," said Tony Pollock (pictured), Chief Executive of IDP Education, an international student placement service.

However, subject choices may be changing as sending countries like China and India become more affluent, students from Singapore prefer to study at their own excellent universities and Malaysia reduces the number of government scholarships for students on expensive overseas courses.

Medicine and related courses in the West have long been popular with students from India, Malaysia and Hong Kong, while business-related degrees and engineering have been the top choice for students from China, Taiwan and Vietnam.

This is according to a survey of 5,000 prospective international students in 14 countries by Hotcourses, a web-based company that advises students on course choice internationally. 

Students from Pakistan are looking for high quality courses in engineering and technology, and Indonesian students are looking at the natural sciences. 

South Korean students, on the other hand, go abroad to study creative arts and design, while students from India and Malaysia are interested in social sciences and communications, said Mike Elms, Chief Executive of Hotcourses. 

However, patterns are changing in key markets such as China, which last year sent 440,000 students to study abroad, overtaking India as the top sending country.

Prospective students from major Chinese cities may be broadening out the subjects they want to study abroad, according to research by the British Council - information which could also be important for decisions by a number newly emerging regional higher educational hubs on what courses to offer to attract international students. 

The British Council's Education Intelligence Unit research into prospective students' intentions in the coming years found that there have been shifts in the most popular subjects chosen for study in the UK in the last two to three years. 

Students from China are still most likely to study business administration and engineering and technology at overseas universities, but growth in the number of students selecting these subjects is slowing while students from China wanting to study mass communication and documentation, and creative arts and design, has shown much bigger growth. 

"We were trying to capture the student decision-making process before the student embarks on a course," said Janet Illieva, head of research at the British Council in Hong Kong. "For China we have seen decreased demand for engineering."

"There has been a shift in demand towards non-traditional subjects in China at the city level," she said. This was most evident in large cities such as Beijing and Shanghai. "We think this is because of the rise in the middle class in these cities. While in the medium-sized cities, there is definitely a rise in those who say they want to study engineering." 

For example, one in four prospective international students in the city of Shenyang want to pursue engineering. In Nanjing, Xi'an and Chengdu the rise was 17% to 18%, taking over where Beijing was a decade ago. These are also cities where there has been a rise in heavy industry and manufacturing, Illieva said.

Students from China saying they want to study mass communication has risen by 81% since 2008, a possible reflection of the burgeoning use of the internet. Prospective Chinese students wanting to study creative arts has risen by 54% during the same period, compared to 25% to 29% growth for business and engineering. Architecture, building and planning has seen 35% growth in interest from China in the last two years. 

Mass communication has soared to become the third most popular choice for Chinese students wanting to study overseas, rising from 8th most popular in 2006-07. Creative arts has risen to fifth place behind social studies compared to ninth place in 2006-07.

The findings have implications for universities hoping to replace declining applications at home with students from overseas, particularly in science and engineering. 

But Hotcourses' Mike Elms said the key motivator for students looking for courses abroad is "to get a better education. They want a higher quality course than is available to them in their own (education) market," he said.

source:http://www.universityworldnews.com/article.php?story=20110318130504251