Commodities Daily Report

Thursday| October 11, 2012

International Commodities

Content
Overview Precious Metals Energy Base Metals Important Events for today

Overview:

Research Team
Nalini Rao - Sr. Research Analyst nalini.rao@angelbroking.com (022) 2921 2000 Extn. 6135 Anish Vyas - Research Associate anish.vyas@angelbroking.com (022) 2921 2000 Extn. 6104

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International Commodities
Overview
US Wholesale Inventories increased by 0.5 percent in August. German Wholesale Price Index (WPI) increased to 1.3 percent. LME Copper inventories declined by 0.7 percent in yesterdays trade. French Industrial Production increased by 1.5 percent in August. th US crude oil inventories rose by 1.6 mn bbl for the w/e on 5 Oct API. Japans Core Machinery Orders declined by 3.3 percent in August.

Market Highlights (% change)

as on 10 October, 2012

Prev day
-0.6

w-o-w
-1.5

m-o-m
4.0

y-o-y
-6.9

Asian markets are trading on a mixed note as the utility companies gain and as S&P downgrades the credit rating of the Spain further dampening the Euro zone debt crisis. US Wholesale Inventories increased by 0.5 percent in August from previous rise of 0.6 percent a month ago US Dollar Index swung between gains and losses and ended 0.1 percent lower. However, most part of the trade the index remained strengthened due to rise in the risk aversion amongst the market participants. Risk aversion was largely due to downgrade of the credit rating of the Spain by Standard &Poors (S&P) due to economic and political risks there. US equities remained in the negative territory and ended on the bearish note due to rise in the risk aversion amongst market participants. The currency touched a low of 79.94 and closed at 80.02 levels on Wednesday. The Indian Rupee depreciated around 0.6 percent in yesterdays trading session. The currency depreciated on the back of warning from S & P ratings that there is a significant chance of cutting countrys credit outlook. If Indias credit outlook is downgraded further it will fall into the category of below the investment grade. The countrys current rating is at BBB- which is at the lowest investment-grade as per the rating agency. Additionally, rise in risk aversion in the global markets along with strength in the DX added further downside pressure on the currency. It touched a low of 53.18 in yesterdays trade and closed at 53.052 on Wednesday. For the current month FII inflows totalled at Rs. 8,977.5 crores till 10 October 2012. While year to date basis, net capital inflows stood at Rs. th 91,308.30 crores till 10 October 2012.
th

$/Euro (Spot)

1.2874

-0.1

-0.2

-0.2

-5.6

Dollar Index

80.02

-0.1

-0.1

0.4

2.7

NIFTY

5652.2

-0.9

-1.4

4.1

13.6

SENSEX

18631.1

-0.9

-1.3

3.5

12.7

DJIA

13345.0

-1.0

-1.1

0.1

16.9

S&P

1432.56

-0.6

-1.3

0.2

19.9

Source: Reuters

Euro declined 0.1 percent due to rise in the risk aversion amongst market participants as S&P downgrades the credit rating of the Spain due to economic and political risks there. Spains debt rating was lowered two levels to BBB- from BBB+. However marginal weakness in the DX along with favorable economic data from the region cushioned sharp fall in the currency yesterday. The currency touched a low of 1.2833 and closed at 1.2874 on Wednesday. German Wholesale Price Index (WPI) increased to 1.3 percent in September from previous rise of 1.1 percent in August. French Industrial Production increased by 1.5 percent in August as against a rise of 0.6 percent a month ago. Italian Industrial Production increased by 1.7 percent in August as compared to decline of 0.1 percent in prior month.

Japans Core Machinery Orders declined by 3.3 percent in August as against a rise of 4.6 percent a month ago. Bank Lending increased by 1 percent in September from previous rise of 0.8 percent a month ago. Japans Prelim Machine Tool Orders declined by 3 percent in September from previous decline of 2.7 percent a month ago.

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International Commodities
Bullion Gold
Spot gold prices swung between gains and losses and ended on flat note in yesterdays session. In the beginning of the trading session selling pressure was seen on the back of renewed concerns of the Euro zone as S& Ps downgrade of Spain credit rating after observing political and economic risks there. However marginal weakness in the DX towards the end led spot prices to end on a flat note on Wednesday. The yellow metal touched a low of $ 1,756.86 per ounce and settled $1762.7 per ounce. In the domestic markets MCX gold prices settled 0.4 percent higher due to depreciation in the Indian rupee. MCX Gold prices touched a high of Rs. 31,480 per 10 gms and closed at Rs.31,456 per 10 gms on Wednesday. Market Highlights - Gold (% change)
Gold Gold (Spot) Gold (Spot -Mumbai) Gold (LBMA-PM Fix) Comex Gold (Dec12) MCX Gold (Dec12) Unit $/oz Rs/10 gms $/oz Last
1762.7

as on 10 October, 2012 Prev day

WoW
-0.9

MoM
1.8

YoY
6.0

31230.0

0.0

-0.2

-2.7

17.3

1761.3

-0.7

-0.8

1.4

5.9

$/oz Rs /10 gms

1763.2

0.0

-0.8

1.9

6.2

31456.0

0.4

1.5

-1.3

18.0

Source: Reuters

Silver
Market Highlights - Silver (% change) Tracking mixed movement in the spot gold prices, spot silver prices gained 0.4 percent on Wednesday. Mild weakness in the US Dollar Index (DX) along with mixed movement in the base metals pack also supported for an upside in the silver prices in yesterdays session. The white metal prices touched a high of $34.13 per ounce and settled at $33.97 per ounce in yesterdays session. In the domestic market depreciation in the Indian rupee acted as a supportive factor for the silver prices on MCX. Silver prices on MCX touched a high of Rs. 62,240 and ended at Rs. 62,176.
Silver Silver (Spot) Silver (Spot -Mumbai) Silver (LBMA) Comex Silver (Dec12) MCX Silver (Dec12) Unit $/oz Rs/1 kg $/oz $/ oz Rs / kg Last
34.0 61500.0 3379.0

as on 10 October, 2012 WoW

Prev day
0.4 0.3 -0.2

MoM
2.1 -2.5 -0.4

YoY
5.9 14.7 7.7

3407.3

0.4

-1.6

2.5

6.6

62176.0

0.8

-0.2

-1.8

16.7

Source: Reuters

Outlook
In the intraday, we expect precious metals to trade on a bearish note on the back of mixed global market sentiments along with strength in the DX. In the domestic markets depreciation in the Indian rupee will cushion sharp fall in the precious metals on the MCX. Technical Outlook
Unit Spot Gold MCX Gold Dec12 Spot Silver MCX Silver Dec12 $/oz Rs/10 gms $/oz Rs/kg valid for October 11, 2012 Support 1758/1753 31360/31270 33.85/33.70 61940/61700 Resistance 1767/1771 31520/31600 34.15/34.35
Source: Telequote

Technical Chart Spot Gold

62490/62800

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Energy Crude Oil
Nymex crude oil prices declined around 1.2 percent yesterday taking cues from more than expected rise in the US crude oil inventories along with expectations of slowdown in the growth of China. However, weakness in the DX cushioned further fall in the prices. Crude oil prices touched an intra-day low of $91.02/bbl and closed at $91.30/bbl in yesterdays trading session. On the domestic bourses, prices declined by 0.2 percent and closed at Rs.4,882/bbl after touching an intra-day low of Rs.4,866/bbl on Wednesday. However, depreciation in the Indian Rupee prevented further fall in the prices on the MCX. API Inventories Data As per the American Petroleum Institute (API) report last night, US crude oil inventories increased by 1.6 million barrels to 364.56 million barrels for the week ending on 5th October 2012. Gasoline inventories gained around 2.5 million barrels to 200.34 million barrels and whereas distillate inventories dropped by 6.2 million barrels to 120.78 million barrels for the same week. EIA Inventories Forecast The US Energy Department (EIA) is scheduled to release its weekly inventories report today at 8:00pm IST and US crude oil inventories is expected to rise by 0.8 million barrels for the week ending on 5th October 2012. Gasoline stocks are expected to remain unchanged whereas distillate inventories are expected to drop by 0.5 million barrels for the same period.
Source: Telequote

Market Highlights - Crude Oil (% change)

as on 10 October, 2012 WoW

Prev. day
-1.3 1.6

MoM
-6.0 1.0

YoY
6.7 4.5

$/bbl

91.3

-1.2

3.5

-5.9

6.3

$/bbl

114.3

-0.1

5.7

-1.4

3.3

Rs/bbl

4882.0

-0.2

5.1

-8.8

15.1

Source: Reuters

Market Highlights - Natural Gas (% change)

as on 10 October, 2012

Unit $/mmbtu Rs/ mmbtu

Last
3.483 186

Prev. day
0.17 0.87

WoW
2.38 5.38

MoM
30.69 25.42

YoY
-2.30 7.27

Source: Reuters

Technical Chart Nymex Crude Oil

Outlook We expect crude oil prices to trade on weak note on the back of mixed global market sentiments along with strength in the DX. Further, expectation of rise in the crude oil inventories is likely to exert downside pressure on the crude oil prices. On the domestic front depreciation in the Indian Rupee will cushion sharp fall in the crude oil prices on the MCX. Technical Outlook
Unit NYMEX Crude Oil MCX Crude Oct12 $/bbl Rs/bbl valid for October 11, 2012 Support 90.60/89.90 4840/4800 Resistance 92.55/93.40 4940/4990

Technical Chart Nymex Natural Gas

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Base Metals
Market Highlights - Base Metals (% change) The base metals pack traded on a negative note in the yesterdays trade on the back of rise in risk aversion in the global markets coupled with expectations of slowdown in Chinese economic growth which added downside pressure on the base metal prices. Additionally, mixed data of LME inventories also exerted pressure on the prices. However, weakness in the DX cushioned sharp fall in the prices. In the Indian markets, depreciation in the Rupee prevented further fall in the prices.
Unit LME Copper (3 month) MCX Copper (Nov12) LME Aluminum (3 month) MCX Aluminum (Oct12) LME Nickel (3 month) $/tonne
17650.0 -1.7 -4.8 6.0 -6.3

as on 10 October, 2012 WoW

Last
8160.0

Prev. day
0.0

MoM
1.0

YoY
12.0

$/tonne

Rs/kg

437.6

0.7

-0.3

-3.3

21.4

$/tonne

2007.0

-2.0

-4.3

-3.5

-9.8

Rs /kg

106.0

-1.3

-2.9

-7.1

-2.3

Copper
Copper, the leader of the base metals complex traded on a flat note yesterday on the back of weak global market sentiments. However, decline in LME Copper inventories by 0.7 percent which stood at 219,425 tonnes along with weakness in the DX cushioned sharp fall in the prices. The red metal touched an intra-day low $8,110.5/tonne and closed at $8,160/tonne in yesterdays session. On the domestic front, prices gained by 0.7 percent as a result of depreciation in the Indian Rupee and closed at Rs.437.60/kg after touching a high of Rs. 437.9/kg on Wednesday. Outlook

MCX Nickel (Oct12) LME Lead (3 month) MCX Lead (Oct12) LME Zinc (3 month) MCX Zinc (Oct12)

Rs /kg

938.9

-0.9

-3.4

2.0

0.9

$/tonne

2197.8

-2.5

-4.4

3.7

10.6

Rs /kg

116.5

-1.7

-2.7

-0.1

19.5

$/tonne

1978.0

-1.8

-4.6

-1.8

3.5

Rs /kg

103.9

-1.3

-3.8

-5.8

10.8

Source: Reuters

LME Inventories
Unit Copper tonnes tonnes tonnes tonnes tonnes 10th October
219,425 5,025,775 124,350 1,009,575 265,675

9th October
221,050 5,034,000 124,248 1,001,500 247,850

Actual Change
-1,625 -8,225 102 8,075 17,825

(%) Change
-0.7 -0.2 0.1 0.8 7.2 Source: Reuters

Base metal prices in todays session are expected to trade on a bearish note due to continuing Euro zone debt concerns and slow down in the global economy. Additionally strength in the DX will also exert downside pressure on the base metals. However, in the domestic markets depreciation in the Indian rupee will cushion sharp fall in the prices of base metals on MCX. Technical Outlook
Unit MCX Copper Nov12 MCX Zinc Oct12 MCX Lead Oct12 MCX Aluminum Oct12 MCX Nickel Oct12 Rs /kg Rs /kg Rs /kg Rs /kg Rs /kg valid for October 11, 2012 Support 435/433 103.20/102.50 115.90/115.20 105.40/104.80 932/925 Resistance 439/441 104.50/105.20 117.10/117.80 106.70/107.40 944/955

Aluminum Nickel Zinc Lead

Technical Chart MCX Copper

Source: Telequote

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International Commodities
Important Events for Today

Indicator Core Machinery Orders m/m Monetary Policy Meeting Minutes G7 Meetings New Loans FOMC Member Yellen Speaks ECB Monthly Bulletin Trade Balance Unemployment Claims Import Prices m/m FOMC Member Stein Speaks Crude Oil Inventories Federal Budget Balance

Country Japan Japan All China US Euro US US US US US US

Time (IST) 5:20am 5:20am All Day 11 14

Actual -3.3% -

Forecast -2.4% 665B -44.1B 369K 0.7% 0.8M -71.0B

Previous 4.6% 704B -42.0B 367K 0.7% -0.5M -190.5B

Impact Medium Medium High Medium Medium Medium High High Medium Medium Medium Medium

1:00pm 1:30pm 6:00pm 6:00pm 6:00pm 7:30pm 8:30pm 11:30pm

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