Commodities Daily Report

Monday| October 22, 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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Commodities Daily Report

Monday| October 22, 2012

International Commodities
Overview
US Existing Home Sales increased by 4.75 million in last month. Japans Trade Balance was deficit of 0.98 trillion Yen in September. German PPI increased by 0.3 percent in September European Current Account was surplus of 8.8 billion Euros in August. UKs Public Sector Net Borrowing was at 10.7 billion Pounds in September

Market Highlights (% change)

Last INR/$ (Spot)
53.84

as on 19 October, 2012

Prev day
-0.5

w-o-w
-2.0

m-o-m
-0.9

y-o-y
-7.5

Asian markets are trading on a negative note taking cues from weak export data from the Japanese economy amid global economic slowdown and territorial dispute with China. US Existing Home Sales increased by 4.75 million in September from previous rise of 4.83 million a month ago US Dollar Index swung between gains and losses and ended 0.1 percent lower. However, the index reversed earlier losses and ended 0.1 percent higher on the back of rise in the risk aversion taking cues from weak global market sentiments caused by uncertainty over Spain bailout and weak economic data from the US economy on Friday. This led to increase in the demand for the low yielding currency that is US Dollar Index (DX).

$/Euro (Spot)

1.3021

-0.3

0.5

0.3

-5.5

Dollar Index

79.69

0.3

-0.1

0.4

3.2

NIFTY

5684.3

-0.6

0.1

-0.1

11.6

SENSEX

18682.3

-0.6

0.0

-0.4

10.3

DJIA

13343.5

-1.5

0.1

-1.7

15.6

S&P

1433.19

-1.7

0.3

-1.9

18.5

US equities ended on negative note erasing earlier gains after observing unfavorable existing home sales data from the US economy on Friday. Gains were witnessed earlier after manufacturing and retail sales data came on a favorable note. The currency touched a weekly low of 78.97 and closed at 79.69 levels on Friday. The Indian Rupee depreciated around 2 percent in the last week. The currency depreciated taking cues from dollar demand from oil importers, defense related companies along with requirement from foreign banks. Additionally, strength in the DX also added downside pressure on the currency. However, sharp downside in the currency was cushioned as result of upbeat domestic market sentiments. The currency touched a low of 53.99 during the week and closed at 53.84 on Friday. For the current month FII inflows totaled at Rs. 11,113.50 crores till 19 October 2012. While year to date basis, net capital inflows stood at Rs. th 175,859.30 crores till 19 October 2012.
th

Source: Reuters

Euro gained 0.5 percent week on week due to optimism that European leaders were committed to establish the Euro area bank supervisor by this year end. However they failed to Spain bailout. Additionally, weakness in the DX also supported an upside in the currency. The currency touched a high of 1.3139 and closed at 1.3021 on Friday. German Producer Price Index (PPI) increased by 0.3 percent in September as against a previous rise of 0.5 percent in August. European Current Account was at a surplus of 8.8 billion Euros in August from previous surplus of 8.1 billion a month ago.

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Commodities Daily Report

Monday| October 22, 2012

Bullion Gold

International Commodities

Spot gold prices declined 1.9 percent week on week due to weak global market sentiments caused by poor U.S. corporate earnings and uncertainty over Spain bailout in the European Central Bank meeting. This caused rise in the risk aversion amongst market participants and thus raised the demand for the low yielding currency that is US Dollar Index in the later part of the week. This exerted downside pressure on the gold prices. Further, unfavorable US home sales data came on a negative note adding to the losses of gold prices. The yellow metal touched a weekly low of $1,715.79/oz and closed at $1,720.49/oz on Friday. On the MCX, Gold October contract ended on a flat note taking cues from bearishness in the spot gold. However, sharp fall in the prices of Gold on the MCX were cushioned due to depreciation in the Indian Rupee and closed at Rs.31,285/10 gms on Friday after touching a weekly low of Rs. 30,862/ 10gms.

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
1720.4

as on 19 October, 2012 Prev day

-1.2

WoW
-1.9

MoM
-2.9

YoY
6.3

31150.0

0.6

0.0

-1.4

18.9

1737.0

-0.3

-1.7

-2.7

7.2

$/oz Rs /10 gms

1722.8

-1.2

-2.0

-3.0

6.9

31258.0

-0.4

-0.1

-0.9

18.6

Source: Reuters

Silver
Spot silver prices declined 4.2 percent taking cues from weakness in the spot gold prices along with bearishness in the base metals. Additionally, strength in the DX also acted as a supportive factor for the downside in the silver prices. The white metal touched a weekly low of $31.89/oz and closed at $32.02/oz on Friday. In the Indian markets, MCX silver prices fell 2.4 percent tracking bearishness in the spot silver and closed at Rs. 59,872/kg after touched a weekly low of Rs.59,623/kg on Friday. However, depreciation in the Indian rupee cushioned sharp fall in the MCX Silver prices in yesterdays session.

Market Highlights - Silver (% change)

Silver Silver (Spot) Silver (Spot -Mumbai) Silver (LBMA) Comex Silver (Dec12) MCX Silver (Dec12) Unit $/oz Rs/1 kg $/oz $/ oz Rs / kg Last
32.0 60909.0 3233.0

as on 19 October, 2012 WoW

-4.2 -0.9 -4.3

Prev day
-2.3 -0.6 -2.0

MoM
-7.2 -3.3 -6.8

YoY
5.0 16.2 5.0

3207.3

-2.3

-4.6

-7.2

6.0

59872.0

-1.4

-2.4

-5.5

15.8

Source: Reuters

Outlook
In the intraday we expect precious metals to trade with negative bias taking cues from bearish global markets along with strength in the DX. Uncertainty over Spain bailout and no specific steps stated in the meeting to resolve the Euro zone debt crisis are creating bearish market sentiments In the domestic markets however, depreciation in the Indian rupee is expected to cushion sharp fall in the prices. Technical Outlook
Unit valid for October 22, 2012 Support Resistance

Technical Chart Spot Gold

Spot Gold MCX Gold Dec12 Spot Silver MCX Silver Dec12

$/oz Rs/10 gms $/oz Rs/kg

1721/1714 31230/31100 32.05/31.90 59600/59300

1729/1733 31380/31450 32.35/32.60 60200/60600

Source: Telequote

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Commodities Daily Report

Monday| October 22, 2012

International Commodities
Energy Crude Oil
Nymex crude oil prices declined by 2 percent in the last week taking cues from failure of European policymakers to provide further aid to Spain, rise in US crude oil inventories along with strength in the DX. However, sharp downside in the prices was cushioned as a result of shut in the Keystone pipeline for three days by TransCanada Corporation which transfers 590,000 barrels of oil a day from Canada to midcontinent. Crude oil prices touched a low of $89.79/bbl during the week and closed at $90.05/bbl in the last trading session. On the domestic bourses, prices declined by 0.1 percent and closed at Rs.4,848/bbl on Friday after touching a low of Rs.4,785/bbl in the last week. However, depreciation in the Indian Rupee prevented sharp fall in the prices. Market Highlights - Crude Oil (% change)
Crude Oil WTI (Spot) Brent (Spot) Nymex Crude (Nov12) ICE Brent Crude (Nov12) MCX Crude (Oct12) Unit $/bbl $/bbl Last
90.0 112.6

as on 19 October, 2012 WoW

-2.0 -2.6

Prev. day
-2.2 -0.6

MoM
-2.8 1.1

YoY
4.7 2.6

$/bbl

90.1

-2.2

-2.0

-3.1

5.6

$/bbl

110.1

-2.0

-3.9

-1.1

0.3

Rs/bbl

4848.0

-1.8

-0.1

-2.3

13.0

Source: Reuters

Market Highlights - Natural Gas (% change)

Natural Gas (NG) Nymex NG MCX NG (Oct12)

as on 19 October, 2012

Natural Gas
On a weekly basis, Nymex natural gas price declined around 0.5 percent on the back of rise in US natural gas inventories coupled with strength in the DX. However, sharp downside in the prices was restricted on account of expectations of cold weather conditions in coming weeks which will increase the demand for the fuel. Gas prices touched a low of $3.398/mmbtu and closed at $3.579/mmbtu in the last trading session of the week. On the domestic front, prices gained by 3.26 percent as a result of depreciation in the Indian Rupee and closed at Rs.196.20/mmbtu on Friday after touching a low of Rs.180.30/mmbtu in the last week. Outlook We expect crude oil prices to trade with negative bias on the back of ample supplies of US Crude oil inventories along with strength in the DX. Expectations that TransCanada Corp, might resume its operations at its Keystone pipeline today after a second delay which may increase the supplies. Additionally, strength in the DX is expected to add to the gains of the crude oil prices. Depreciation in the Indian Rupee will cushion sharp fall in the prices on the MCX. Technical Outlook
Unit valid for October 22, 2012

Unit $/mmbtu Rs/ mmbtu

Last
3.579 196.2

Prev. day
-0.06 2.40

WoW
-0.47 3.26

MoM
27.82 29.59

YoY
-0.50 9.92

Source: Reuters

Technical Chart Nymex Crude Oil

Source: Telequote

Technical Chart Nymex Natural Gas

Support

Resistance

NYMEX Crude Oil MCX Crude Oct12

$/bbl Rs/bbl

89.40/88.45 4870/4820

90.90/91.75 4950/5000

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Commodities Daily Report

Monday| October 22, 2012

International Commodities
Base Metals
The base metals pack traded on a negative note in the last week on the back of mixed global market sentiments, strength in the DX along with rise in the LME inventories Additionally, slowdown in the Chinese economy also added downside pressure on the prices In the Indian markets, depreciation in the Rupee supported an upside in the prices on the MCX. Market Highlights - Base Metals (% change)
Unit LME Copper (3 month) MCX Copper (Nov12) LME Aluminum (3 month) MCX Aluminum (Oct12) LME Nickel (3 month) MCX Nickel Rs /kg
913.9 -1.4 0.4 -5.0 0.7

as on 19 October, 2012 WoW

-1.6

Last
7992.3

Prev. day
-2.6

MoM
-3.6

YoY
17.8

$/tonne

Rs/kg

435.5

-1.9

0.2

-2.5

27.2

$/tonne

1969.5

-2.0

-0.9

-7.1

-6.6

Copper
Copper, the leader of the base metals complex declined by 1.6 percent during the week on the back of mixed global market sentiments, strength in the DX along with rise in LME Copper inventories by 2.3 percent which stood at 220,900 tonnes. Also, slowdown in the Chinese economy exerted downside pressure on the prices. The red metal touched a low of $7,983.0/tonne and closed at $7,992.25/tonne in last trading session. On the domestic front, prices gained by 0.2 percent as a result of depreciation in the Indian Rupee and closed at Rs.435.50/kg on Friday after touching a high of Rs.444.4/kg in the last week. Weekly Copper Inventories The red metals inventories on the LME warehouses increased th around 2.3 percent to 220,900 tonnes on 19 October 2012 from th the previous level of 215,900 tonnes on 12 October 2012. Copper inventories at warehouse monitored by the Shanghai Futures Exchange increased by 8.4 percent to 196,710 tonnes in the th week ended 19 October. Outlook Base metal prices in todays session are expected to trade bearish taking cues from weak global markets and strength in the DX. Weak export data from the Japanese economy along with slower growth in the China might reduce the demand from key consuming nation. Further, weak data from the US economy might also create bearish market sentiments. However, in the domestic markets depreciation in the Indian rupee will act as a supportive factor for the base metals prices 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 22, 2012 Support 433/430 99.2/98.5 112.6/111.8 104.4/104.9 907/899 Resistance 437/440 100.5/101.2 114/115.7 106.2/106.9 923/931

Rs /kg

105.8

-0.9

1.0

-5.3

1.1

$/tonne

16930.0

-2.3

-1.4

-6.6

-6.7

(Oct12) LME Lead (3 month) MCX Lead (Oct12) LME Zinc (3 month) MCX Zinc (Oct12)
Source: Reuters

$/tonne

2113.8

-2.0

-1.2

-7.8

18.1

Rs /kg

113.9

-1.4

0.4

-6.0

27.6

$/tonne

1882.0

-2.1

-2.6

-11.1

8.2

Rs /kg

100.1

-1.3

-1.2

-10.3

15.2

LME Inventories
Unit Copper Aluminum Nickel Zinc Lead tonnes tonnes tonnes tonnes tonnes 19th October
220,900 5,039,125 127,500 1,116,075 293,675

18th October
225,150 5,048,450 127,152 1,116,625 295,275

Actual Change
-4,250 -9,325 348 -550 -1,600

(%) Change
-1.9 -0.2 0.3 0.0 -0.5 Source: Reuters

Technical Chart MCX Copper

Source: Telequote

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Commodities Daily Report

Monday| October 22, 2012

International Commodities
Important Events for Today

Indicator Trade Balance BOJ Gov Shirakawa Speaks FOMC Member Pianalto Speaks

Country Japan Japan US

Time (IST) 5:20am 6:00am 11:00pm

Actual -0.98T -

Forecast -0.74T -

Previous -0.47T -

Impact Medium Medium Medium

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