Content

Commodities Daily Report Monday| June 11, 2012

International Commodities

Content Overview Precious Metals Energy Base Metals Important Events for today

Overview:

Research Team Reena Walia Nair - Sr. Research Analyst [email protected] (022) 2921 2000 Extn. 6134

Anish Vyas - Research Associate [email protected] (022) 2921 2000 Extn. 6104

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International Commodities Overview  US Trade Balance at a deficit of $50.1 billion in April.  Shanghai Copper inventories declined around 10 percent in last week.

Market Highlights (% change)

as on 8 June, 2012

 German Trade Balance at surplus of 14.1 billion Euros in April. Last

Prev day

w-o-w

m-o-m

y-o-y

INR/$ (Spot)

55.415

-0.8

0.2

-3.3

-19.3

$/Euro (Spot)

1.2516

-0.4

0.7

-3.1

-13.7

Dollar Index

82.56

0.6

-0.5

2.7

11.3

NIFTY

5068.4

0.4

4.7

2.8

-8.2

SENSEX

16718.9

0.4

4.7

2.6

-9.1

DJIA

12554.2

0.7

3.6

-2.1

3.5

S&P

1325.7

0.8

3.7

-2.8

3.6

 UK’s PPI input declined to 2.5 percent in last month.

Asian markets are trading on a positive note today on the back of Spain seeking help from the Euro region to bailout 100 billion Euros for its banking system. Additionally, increase in China’s exports has also acted as a positive factor for the upbeat global sentiments. US Trade Balance was at a deficit of $50.1 billion in April as against a previous deficit of $52.6 billion a month ago. Wholesale Inventories increased by 0.6 percent in April from rise of 0.3 percent in previous month. China’s Trade Balance was at a surplus of 18.7 billion Yuan in previous month as against 18.4 billion Yuan in April. Consumer Price Index (CPI) rose at slow pace of 3 percent in May from previous rise of 3.4 percent in April. Producer Price Index (PPI) declined by 1.4 percent in last month as compared to previous decline of 0.7 percent in April. Fixed Asset Investment was at 20.1 percent in May with respect to 20.2 percent a month ago. Industrial Production increased by 9.6 percent in May when compared to 9.3 percent in April. Retail Sales was at 13.8 percent in prior month from 14.1 percent in April.

Source: Reuters

On a weekly basis, the US Dollar Index (DX) declined by 0.5 percent on the back of positive sentiments in the global markets which led to fall in demand for the low yielding currency. Additionally, US equities also gained more than 3.5 percent during the week. The DX touched a low of 81.96 and closed at 82.47 on Friday. The Indian Rupee appreciated by 0.2 percent in the last week on the back of weakness in the DX. Indian equities also gained more than 4.5 percent which also acted as a positive factor for the currency. The Rupee touched closed at 55.42 on Friday and touched a high of 54.82 during the week. th

For the current month, FII outflows totaled at Rs 1,067.0 crores till 8 June 2012. While on a year to date basis, net capital inflows stood at Rs 41,427.40 crores till 8th June 2012.

Japan’s Business Survey Index (BSI) Manufacturing Index was at -5.7level in Q1 of 2012 from previous -7.3-mark in previous quarter. M2 Money Stock rose by 2.1 percent in May compared to 2.6 percent in April.

The Euro appreciated by 0.7 percent during the week on the back of ease in concerns over the region’s debt crisis coupled with weakness in the DX. The currency touched a high of 1.2625 in last week and closed at 1.2516 on Friday. German Trade Balance was at a surplus of 14.1 billion Euros in April as against previous surplus of 14 billion Euros a month ago. French Gov Budget Balance was at deficit of 59.9 billion Euros in April from previous deficit of 29.4 billion Euros in March. French Trade Balance was at a deficit of 5.8 billion Euros in April compared to deficit of 5.6 billion Euros a month earlier. Italian Industrial Production declined by 1.9 percent in April with respect to rise of 0.6 percent in prior month. UK’s Producer Price Index (PPI) Input declined by 2.5 percent in May from previous decline of 1.4 percent in April. Consumer Inflation Expectations was at 3.7 percent in Q1 of 2012 compared to 3.5 percent in Q4 of 2011. PPI Output declined by 0.2 percent in last month with respect to rise of 0.6 percent in April.



International Commodities Bullion Gold Spot gold prices declined around 2 percent in the last week. A weaker DX cushioned further fall in gold prices. The yellow metal touched a low of $1561/oz during the week and closed at $1593.84/oz in the last trading session. On the MCX Gold August contract declined by 0.6 percent on account of appreciation in the Indian Rupee and closed at Rs.29,580/10 gm on Friday after touching a low of Rs.29,106/10 gm during the last week. Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, increased around 0.1 percent to 1,274.78 tonnes on 8th June 2012 from the previous level of 1,273.88 tonnes on 1st June 2012.

Market Highlights - Gold (% change) Gold

Unit

Last

Gold (Spot)

$/oz

1593.8

Gold (Spot -Mumbai)

Rs/10 gms

Gold (LBMA-PM Fix)

as on 8 June, 2012 Prev day

WoW

MoM

YoY

0.3

-2.0

0.9

3.3

29300.0

-1.5

1.2

3.2

31.2

$/oz

1576.5

-1.8

-1.8

-0.4

2.5

Comex (Jun’12)

$/oz

1590.1

0.2

-1.9

0.4

3.1

MCX (Aug’12)

Rs /10 gms

29560.0

0.8

-0.6

4.2

30.9

Source: Reuters

Market Highlights - Silver (% change)

Silver Taking cues from fall in gold prices coupled with mixed performance in base metals, Spot silver also declined by 0.6 percent in last week. However, weakness in the DX restricted further downside in the silver prices. The white metal touched a low of $27.93/oz during the week and closed at $28.47/oz on Friday. On the domestic front, prices declined by 0.3 percent on the back of appreciation in the Rupee and closed at Rs.54,335/kg on Friday. On a weekly basis, holdings in the iShares Silver Trust, the world's largest silver-backed exchange-traded fund, increased around 0.3 percent to 9,643.17 tonnes on 1st June 2012 from the previous level th of 9,669.08 tonnes on 8 June 2012.

as on 8 June, 2012

Silver

Unit

Last

Prev day

WoW

MoM

YoY

Silver (Spot)

$/oz

28.5

-0.3

-0.6

-1.4

-24.2

Rs/1 kg

54560.0

-2.1

1.7

1.5

-2.9

Silver (LBMA)

$/oz

2817.0

-3.8

2.9

-1.4

-23.9

Comex (Jul’12)

$/ oz

2846.1

-0.2

-0.1

-1.4

-23.9

MCX (Jul’12)

Rs / kg

54296.0

0.4

-0.3

0.3

-2.8

Silver (Spot -Mumbai)

Source: Reuters

Technical Chart – Spot Gold

Outlook From the intra-day perspective, we expect precious metals to trade with a positive bias on the back of weakness in the DX coupled with upbeat global market sentiment. In the Indian markets, appreciation in the Rupee will cap further gains in prices. Technical Outlook

valid for June 11, 2012 Unit

Support

Resistance Source: Telequote

Spot Gold MCX Gold Aug’12 Spot Silver MCX Silver Jul’12

$/oz

1588/1580

1605/1615

29400/29250

29700/29900

$/oz

28.60/28.40

28.90/29.10

Rs/kg

54000/53700

54500/54900

Rs/10 gms



International Commodities Energy Market Highlights - Crude Oil (% change)

Crude Oil On a weekly basis, Nymex crude oil prices gained around 1 percent on the back of decline in US crude oil inventories along with supply concerns from Iran. Additionally, a weaker DX also helped upside in prices of the commodity. Crude oil prices touched a high of $87.03/bbl in the last week and closed at $84.34/bbl in the last trading session. On the domestic bourses, prices declined by 0.1 percent on account of appreciation in the Indian Rupee and closed at Rs.4,625/bbl on Friday after touching a low of Rs.4,522/bbl during the last week.

as on 8 June, 2012

Crude Oil

Unit

Last

Prev. day

WoW

MoM

YoY

WTI (Spot)

$/bbl

84.1

-0.8

1.1

-12.4

-17.5

Brent (Spot)

$/bbl

98.3

-2.4

-1.0

-12.9

-18.7

Nymex Crude (July’12)

$/bbl

84.1

-0.8

1.0

-12.5

-17.5

ICE Brent Crude (May’12)

$/bbl

99.5

-0.5

1.1

-11.4

-16.8

Rs/bbl

4625.0

-1.5

-0.1

-10.4

1.7

MCX Crude (June’12)

Source: Reuters

News

Market Highlights - Natural Gas

China’s net crude oil imports rose by 10 percent to 5.98 million barrels a day in May. The previous high record import was in the month of February at 5.87 million barrels a day.

Natural Gas

Natural Gas (NG) Nymex NG MCX NG (June’12)

Unit

(% change)

as on 8 June, 2012

Last

Prev. day

WoW

MoM

YoY

$/mmbtu

2.305

1.23

-1.07

-5.42

-52.45

Rs/ mmbtu

127.9

1.03

-2.44

2.48

-41.09

Source: Reuters

Nymex natural gas prices declined by more than 1 percent in last week on the back of more than expected rise in US crude oil inventories. However, sharp downside in prices was restricted on the back of weakness in the DX.

Technical Chart – Nymex Crude Oil

Gas prices touched a low of $2.231/mmbtu during the week and closed at $2.305/mmbtu on the last trading day of the week. In the domestic markets, prices declined around 2.4 percent on the back of appreciation in the Indian Rupee and closed at Rs.127.90/mmbtu on Friday.

Outlook In today’ session, we expect crude oil prices to trade on a positive note on the back of increase in China’s crude imports, expectation of ease in Euro Zone debt crisis along with weakness in the DX. Appreciation in the Indian Rupee will cap further gains on the MCX. Technical Outlook

Source: Telequote

Technical Chart – Nymex Natural Gas


Support

Resistance

NYMEX Crude Oil

$/bbl

85.40/84.60

87.10/88.0

MCX Crude June’12

Rs/bbl

4640/4600

4730/4780 Source: Telequote



International Commodities Market Highlights - Base Metals (% change)

Base Metals The base metals pack traded on a mixed note in the last week on the back of rise in risk aversion in the global markets. However, weaker DX prevented further fall in prices. In the Indian context, appreciation in the Indian Rupee led to further fall in prices.

Unit LME Copper (3

Last

as on 8 June, 2012

Prev. day

WoW

MoM

YoY

$/tonne

7299.0

-2.4

-0.6

-8.8

-19.4

Rs/kg

404.2

-1.7

-0.9

-6.4

-0.4

$/tonne

1986.0

-0.1

0.7

-3.1

-25.2

Rs /kg

108.9

0.5

0.0

0.4

-7.9

16819.0

1.1

4.6

-1.7

-27.2

Rs /kg

933.8

1.9

4.3

1.5

-9.9

$/tonne

1893.0

-1.7

-0.5

-8.5

-26.9

Rs /kg

105.1

-0.8

-0.8

-5.0

-9.5

$/tonne

1869.0

-1.8

-1.0

-3.7

-18.0

Rs /kg

103.6

-1.1

-1.0

-0.5

1.6

month) MCX Copper (June’12)

Copper

LME Aluminum

Copper, the leader of the base complex declined 0.6 percent on the LME in the last week. However, further fall in prices was cushioned on account of weakness in the DX and fall in LME copper inventories by 0.7 percent to 229,675 tonnes. The red metal touched a low of $7233/tonne in the last week and closed at $7299/tonne on Friday. On the MCX, Copper June contract prices declined around 1 percent on the back of appreciation in the Indian Rupee and closed at Rs.404.20/kg on Friday after touching a low of Rs.397/kg during the week.

(3 month) MCX Aluminum (June’12) $/tonne

LME Nickel (3 month) MCX Nickel (June’12) LME Lead (3 month) MCX Lead (June’12)

Weekly Copper Inventories

LME Zinc

The red metal’s inventories on the LME warehouses increased around 0.7 percent to 229,675 tonnes on 8th June 2012 from the previous level of 230,875 tonnes on 1st June 2012.

(3 month)

Weekly copper inventories at warehouses monitored by the Shanghai Futures Exchange decreased sharply around 10 percent to 132,421 tonnes last week.

LME Inventories

MCX Zinc (June’12)

Source: Reuters

Outlook Base metals complex is expected to trade higher today on account of weakness in the DX along with ease in concerns over the Euro Zone debt crisis. Additionally, increase in exports from China will also lead to upside in base metal prices. Technical Outlook

Unit

th

7 June

8 June

th

Copper

tonnes

229,675

229,300

Actual Change 375

(%) Change 0.2

Aluminum

tonnes

4,864,200

4,875,375

-11,175

-0.2

Nickel

tonnes

105,318

106,116

-798

-0.8

Zinc

tonnes

952,050

942,025

10,025

1.1

Lead

tonnes

345,325

345,750

-425

-0.1 Source: Reuters

Technical Chart – LME Copper


Support

Resistance

MCX Copper June’12

Rs /kg

402.0/400.0

408.0/410.50

MCX Zinc June’12

Rs /kg

103.20/102.50

104.50/105.20

MCX Lead June’12

Rs /kg

104.60/104.0

106.0/106.70

MCX Aluminum June’12

Rs /kg

108.30/107.60

109.40/110.0

MCX Nickel June’12

Rs /kg

925/910

938/946

Source: Telequote



International Commodities Important Events for Today

Indicator

Country

Time (IST)

Actual

Forecast

Previous

Impact

BSI Manufacturing Index

Japan

5:20am

-5.7

-2.4

-7.3

Medium

French Industrial Production m/m

Euro

12:15pm

-

0.2%

-0.9%

Medium

US

9:30pm

-

-

-

Medium

FOMC Member Lockhart Speaks
