Daily Brief Energy/Materials: Korea Zinc, Lynas Corp Ltd, Deep Industries, Crude Oil, SRF Ltd, SGX Rubber Future TSR20, Iron Ore, Copper, Covestro AG and more

• The 5% voting gap between Choi and MBK leaves NPS and sideline minority players as key swing factors, with NPS’s stake potentially closing the gap for Choi.
• If NPS sold half its stake in the tenders, it’s down to 4%, not enough to close the gap, likely giving MBK the win and triggering a post-meeting price drop.
• The key to our outright short is NPS’s January 10 disclosure, with market chatter suggesting NPS has likely sold about half its holdings in the two tenders.

• With 4 days left to review cutoff, there is 1 close add and 3 potential deletions for the MV Australia Equal Weight Index at the December rebalance.
• Even if there are no constituent changes, capping changes will lead to one-way turnover of 4.6% and a round-trip trade of A$243m.
• The final list of inclusions/exclusions will depend on price movements till Friday and whether the index provider makes any significant changes to the free float of stocks in the universe.

• Deep Industries (DEEPI IN) targeting 800 Cr worth of revenue by FY26, with 35% CAGR in next 2 years.
• India is opening more oil & gas wells, needs services of company like Deep who can provide one stop shop for all Oil & Gas Needs.
• Key Triggers- Prabha Barge(60% Operating Margins) and Dolphin Offshore(for diversifying into offshore services) will further margin accretive.

• Trump’s energy policy focused on increasing domestic production and exerting pressure on oil exports to bring down prices
• Forecast for 2025 and 2026 predicts global commodities market growth and potential oil price fluctuations
• OPEC members plan to increase capacity in 2025, leading to a large surplus in the oil market and potentially lower prices in 2026

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• In this Insight, we share our channel inputs that might be relevant for SRF Ltd (SRF IN), Navin Fluorine International (NFIL IN), and Gujarat Fluorochemicals (FLUOROCH IN).
• Weak demand and operational conditions in China have forced companies to focus on clearing inventory rather than maintaining prices, which has negatively impacted India’s export-oriented companies.
• Industry-Wide product cycles, especially in Specialty Chemicals, are shortening, which is a potential threat to leaders like SRF Ltd (SRF IN).

• Latex export revenue posts 18% growth YoY during Jan-Sept
• Tire industry can consume 200,000 tons of latex a year at present
• Govt placing a lot of attention on research, downstream foray

• The US oil and gas rig count fell by 1 to 583 for the week ending on 22/Nov, reporting a second consecutive weekly fall.
• For the week ending 15/Nov, US oil production fell to 13.2m bpd from 13.4m bpd. Output was at a record high of 13.5m bpd between 11/Oct through 01/Nov.
• US energy producers added two rigs in Texas and one each in Wyoming and Oklahoma. They cut three rigs in Louisiana and one each in California and Colorado.

• SGX IO Futures closed USD 3.83/ton higher for the week ending on 22/Nov. It traded in a range of USD 6.90/ton, which was smaller than the prior week.
• Chinese portside inventories increased by 350k tons WoW to 148.86 MT as of 22/Nov. Steel mill inventories rose 13.8% to 15.6 MT in mid-November compared to early November.
• Iron ore prices remain well supported in the near term despite high stockpiles at Chinese ports due to strong consumption and robust steel production ahead of the Lunar New Year.

• Disappointing September/October China lending data with TSF down 9%/24% YoY to 3.7/1.4 trillion RMB Vs. (analysts expectations of 4/1.5 trillion RMB) has led to skepticism about China’s recovery story.
• Copper prices have dropped below 9000 USD/ton and stayed there despite the fall of exchange inventories. 
• We like the LT copper story and see long-term benefits for stocks like Southern Copper (SCCO US), Ivanhoe Mines (IVN CN), and Teck Resources (TECK US). 

• ADNOC offers €62/share (54% premium), valuing Covestro at €11.7 billion, with high likelihood of completion despite regulatory and market conditions, closing expected in H2 2025.
• Potential additional offer period will run until December 16. ADNOC partnership offers access to cheaper resources, and supports future growth amid sector challenges and consolidation opportunities in Europe.
• The ADNOC acquisition offers a strong value realization opportunity for shareholders amidst market uncertainty. Gross spread is 6.7%. Long and accept offer.