Commodities Daily Report

Friday| November 9, 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 Analyst anish.vyas@angelbroking.com (022) 2921 2000 Extn. 6104

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Commodities Daily Report

International Commodities
Overview
Chinas Consumer Price Index (CPI) grew at slower pace of 1.7%. German Trade Balance was at a surplus of 17 billion Euros in Sept. Japans Economy Watchers Sentiment declined to 39-mark in Oct. UKs Official Bank Rate remained unchanged at 0.5 percent in Nov. French Trade Balance was at a deficit of 5 billion Euros in September.

Market Highlights (% change)

as on 8 November, 2012

w-o-w -1.3

m-o-m -3.5

y-o-y -9.3

Asian markets are trading on a weak note owing to bearish market sentiments amidst concerns that Greece bailout might be delayed and as the central bank of Australia cuts its growth forecast. US Trade Balance was at a deficit of $41.5 billion in September as against a previous deficit of $43.8 billion in August. Unemployment Claims declined by 8,000 to 355,000 for the week ending on 2nd November from previous rise of 363,000 in prior week. Chinas Consumer Price Index (CPI) increased at slow pace of 1.7 percent in October as against a rise of 1.9 percent in September. Producer Price Index (PPI) declined by 2.8 percent in October from earlier decline of 3.6 percent in September. The US Dollar Index (DX) swung between gains and losses and settled on a flat note in yesterdays trading session. In the early part of the trade rise in the risk aversion was witnessed owing to rise in risk aversion in the global market sentiments which led to increase in demand for the low yielding currency. However, positive data from the US economy led to erase some of the gains towards the end of the session. US equities settled on a bearish note on the back of worries that the new government in US may not be able to avoid fiscal cliff issues. It touched an intra-day high of 81.11 and closed at 80.89 in yesterdays trade. The Indian Rupee depreciated by 0.4 percent in the yesterdays trading session. The currency depreciated taking cues from weak global market sentiments along with strength in the DX in the initial part of the trade. Additionally, uncertainties over the fiscal cliff in US by re-election of President Obama had led to expectations that it will threaten the economic growth in the US. However, sharp downside in the currency was cushioned on account of increasing FIIs inflows and selling of dollars from exporters. It touched an intra-day low of 53.958 in yesterdays trade and closed at 54.20 on Wednesday. For the current month FII inflows totaled at Rs. 2,859.0 crores till 8th November 2012. While year to date basis, net capital inflows stood at Rs. 96,553.90 crores till 8th November 2012. Japans Economy Watchers Sentiment declined by 2.2 points to 39-mark in October from previous rise of 41.2-level in September. Japans M2 Money Stock increased at slow pace of 2.3 percent in October from previous rise of 2.4 percent in September.

$/Euro (Spot)

1.2745

-0.2

-1.5

-1.7

-7.9

Dollar Index

80.89

0.0

0.9

1.6

5.4

NIFTY

5738.8

-0.4

1.7

1.1

8.5

SENSEX

18846.3

-0.3

1.5

0.7

7.3

DJIA

12811.3

-0.9

-3.2

-5.7

5.3

S&P

1377.51

-1.2

-3.5

-5.4

8.0

Source: Reuters

The Euro continued to extend earlier losses on account of concerns that Greece may not be able to achieve the bailout funds until November as they are waiting a full report on the countrys compliance. Additionally, strength in the DX in the early part of the trade also added downside pressure on the currency. Further, unfavorable data from the region also acted as a bearish factor for the currency. The currency touched an intra-day low of 1.2716 and closed at 1.277 on Thursday. German Trade Balance was at a surplus of 17 billion Euros in September as against a previous surplus of 18.1 billion Euros in August. French Trade Balance was at a deficit of 5 billion Euros in September from previous deficit of 5.3 billion Euros a month ago. European Minimum Bid Rate remained unchanged at 0.75 percent in November. UKs Asset Purchase Facility remained unchanged at 375 billion Pounds in the month of November. Official Bank Rate also remained unchanged at 0.5 percent in current month.

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International Commodities
Bullion Gold
Spot gold prices gained 0.8 percent taking cues from optimism that the stimulus measures in the nations are expected to continue from the nations such as US and European Central Bank (ECB). This is likely to increase the demand for yellow metal as a hedge against inflation. However mild firmness in the DX capped sharp gains in the gold prices. The yellow metal touched an intra-day high of $1,734.81/oz and closed at $1,730/oz on Thursday. Gold prices on MCX settled in the positive territory taking cues from firmness in the spot gold prices along with demand ahead of Diwali. Additionally, depreciation in the Indian rupee also acted as a supportive factor for the gold prices on MCX. Gold prices on MCX touched a high of Rs. 31,375 per 10 gms and settled at 31,340 per 10 gms on Thursday. 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 1725.4 $/oz Rs /10 gms 31340.0 0.4 1.3 0.0 8.9 0.7 0.7 -2.7 -4.1 31120.0 1717.0 -0.2 0.1 0.8 0.0 0.2 -3.2 8.6 -4.3 Last 1730.0 Prev day 0.8 as on 8 November, 2012 WoW 0.9 MoM -2.5 YoY -3.1

Source: Reuters

Silver
Taking cues from strength in the spot gold prices, Spot silver prices gained 1.8 percent on Thursday. Firmness in the base metals prices also acted as a supportive factor for the silver prices. Mild strength in the DX, however capped sharp gains in the Spot silver prices in yesterdays trading session. The white metal touched an intra-day high of $32.4/oz and closed at $32.3/oz on Thursday. In the Indian markets prices increased by 1.1 percent erasing earlier gains of the day due to strength in the spot silver along with depreciation in the Indian Rupee and closed at Rs.59,881/kg after touching an intra-day high of Rs.60,229/kg in yesterdays trading session.

Market Highlights - Silver (% change)

as on 8 November, 2012 WoW 0.3 -1.0 -2.9 0.0 0.3 MoM -4.8 -1.2 -6.4 -5.2 -2.6 YoY -7.5 4.2 -8.5 -8.3 3.1

Source: Reuters

Technical Chart Spot Gold

Outlook
In todays session we expect precious metals to trade on a firm note due to mixed global market sentiments along with weakness in the DX. With stimulus measures to continue further in U.S may cause precious metals demand to increase as hedge against inflation. In the domestic markets appreciation in the Indian rupee will restrict sharp gains in the metals prices 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 November 9, 2012 Support 31240/31130 1728/1722 32.15/31.85 59400/58900 Resistance 31420/31500
Source: Telequote

1738/1743 32.60/32.75 60200/60500

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International Commodities
Energy Crude Oil
Nymex crude oil prices gained around 0.8 percent yesterday taking cues from unexpected decline in US unemployment claims along with expectations that Chinese economy will recover which is the second biggest consumer of crude oil. However, further upside in the prices was capped as a result of strength in the DX. Crude oil prices touched an intra-day high oil $85.70/bbl and closed at $85.09/bbl in yesterdays trading session. On the domestic bourses, prices declined by 0.4 percent and closed at Rs.4,626/bbl after touching an intra-day low of Rs.4593/bbl on Thursday. However, depreciation in the Indian Rupee cushioned sharp fall in the prices on the MCX. Market Highlights - Crude Oil (% change)
Crude Oil WTI (Spot) Brent (Spot) Nymex Crude (Dec12) ICE Brent Crude (Dec12) MCX Crude (Nov12) Unit $/bbl $/bbl Last 85.1 108.3 Prev. day 0.7 -0.7 WoW -2.3 -1.3 as on 8 November, 2012 MoM -4.9 -4.2 YoY -12.1 -6.8

$/bbl

85.1

0.8

-2.3

-4.7

-12.1

$/bbl

107.3

0.4

-0.9

-4.1

-6.7

Rs/bbl

4626.0

-0.4

-1.5

-1.6

-2.4

Natural Gas
Nymex natural gas prices gained around 0.6 percent yesterday on the back of less than expected rise in US natural gas inventories, which shows that demand for the fuel is increasing and forecast for cooler winter weather also support an upside in the prices. However, sharp upside in the prices was capped as a result of strength in the DX. Gas prices touched an intra-day high of $3.613/mmbtu and closed at $3.591/mmbtu on Thursday. On the domestic front, prices increased around 0.3 on account of depreciation in the Indian Rupee and closed at Rs.195.7/mmbtu after touching an intra-day high of Rs.196.40/mmbtu in yesterdays trading session. EIA Inventories Data US Energy Information Administration (EIA) released its weekly inventories yesterday and US natural gas inventory has increased less than expected by 21 billion cubic feet (bcf) which stood at 3.929 trillion cubic feet for the week ending on 2nd November 2012. Outlook In the intra-day, we expect crude oil prices to trade on a positive note on the back of positive data from the US economy indicating recovery ahead. This might increase the demand for the crude oil prices. Favourable data from the Chinese economy is also expected to support an upside in the crude oil prices. In the domestic markets appreciation the Indian rupee will cap sharp gains in the crude oil prices on the MCX. Technical Outlook
Unit NYMEX Crude Oil MCX Crude Nov 12 $/bbl Rs/bbl valid for November 9, 2012 Support 84.65/83.70 4590/4540 Resistance 86.10/86.90 4670/4710

Source: Reuters

Market Highlights - Natural Gas (% change)

as on 8 November, 2012

Unit $/mmbtu Rs/ mmbtu

Last 3.591 195.7

Prev. day 0.59 0.26

WoW -2.44 -1.51

MoM 5.00 9.15

YoY -4.55 6.07

Source: Reuters

Technical Chart Nymex Crude Oil

Source: Telequote

Technical Chart Nymex Natural Gas

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International Commodities
Base Metals
The base metal pack traded on a firm note on the back of positive data from the US and expectation that the new elected government in China may bring in reforms to boost the economy. However, mild strength in the DX capped sharp gains in the base metals. However, sharp downside in the prices was cushioned as a result of decline in LME inventories. Market Highlights - Base Metals (% change)
Unit LME Copper (3 month) MCX Copper (Nov12) LME Aluminum (3 month) $/tonne 1925.0 0.4 -1.0 -7.4 -10.5 Rs/kg 416.9 0.4 -1.5 -3.8 7.7 $/tonne Last 7648.0 as on 8 November, 2012 WoW -2.4 MoM -6.5 YoY -2.4

Prev. day 0.6

Copper
Copper, the leader of the base metals complex gained 0.6 percent on the back of expectation of rise in the demand from the key consuming nations particularly China and US. However, mild strength in the DX capped sharp fall in the copper prices. However, sharp downside in the prices was prevented on the back of decline in LME Copper inventories by 0.3 percent which stood at 2,44,850 tonnes. The red metal closed at $7,648/tonne in yesterdays trading session. On the domestic front, prices fell by 0.4 percent and closed at Rs.416.9/kg after touching an intra-day high of Rs.417.70/kg. Depreciation in the Indian Rupee also supported an upside in the Copper prices on the MCX. Outlook

MCX Aluminum (Nov12) LME Nickel (3 month) MCX Nickel (Nov12) LME Lead (3 month) MCX Lead (Nov12) LME Zinc (3 month) MCX Zinc (Nov12)

Rs /kg

104.3

-0.1

-0.1

-3.9

-1.5

$/tonne

16153.0

1.0

-1.2

-10.6

-13.1

Rs /kg

878.8

0.8

-0.4

-7.5

-4.5

$/tonne

2217.3

1.9

4.3

-1.7

9.2

Rs /kg

121.2

1.8

5.5

2.7

20.9

$/tonne

1929.0

1.7

2.2

-5.2

-2.1

Rs /kg

103.9

1.6

2.8

-2.1

5.9

Source: Reuters

LME Inventories
Unit Copper tonnes tonnes tonnes tonnes tonnes 8th November 244,850 5,086,325 130,764 1,163,075 314,775 7th November 245,575 5,084,425 130,500 1,166,650 317,450 Actual Change -725 1,900 264 -3,575 -2,675 (%) Change -0.3 0.0 0.2 -0.3 -0.8
Source: Reuters

From the intraday perspective, base metal prices are expected to trade on a positive note on account of mixed global market sentiments along with weakness in the DX. Additionally, depreciation in the Rupee will restrict sharp fall for the base metal prices on the MCX. Technical Outlook
Unit MCX Copper Nov12 MCX Zinc Nov12 MCX Lead Nov12 MCX Aluminum Nov12 MCX Nickel Nov12 Rs /kg Rs /kg Rs /kg Rs /kg Rs /kg valid for November 9, 2012 Support 414/411 103/102.2 120.5/119.8 103.7/102.8 870/864 Resistance 418.5/421 104.5/105.5 122/122.8 105.2/106 884/893

Aluminum Nickel Zinc Lead

Technical Chart MCX Copper

Source: Telequote

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International Commodities
Important Events for Today

Indicator CPI y/y PPI y/y Fixed Asset Investment ytd/y Industrial Production y/y French Industrial Production m/m Italian Industrial Production m/m Import Prices m/m Prelim UoM Consumer Sentiment

Country China China China China Euro Euro US US

Time (IST) 7:00am 7:00am 11:00am 11:00am 1:15pm 2:30pm 7:00pm 8:25pm

Actual 2.3% -2.8% -

Forecast 1.9% -2.7% 20.6% 9.5% -0.9% -1.4% 0.0% 82.6

Previous 1.9% -3.6% 20.5% 9.2% 1.5% 1.7% 1.1% 82.6

Impact High Medium Medium Medium Medium Medium Medium High

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