Commodities Daily Report

Friday| September 7, 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

Friday| September 7, 2012

International Commodities
Overview
US Unemployment Claims declined 365,000 for w/e on 31st August. German Factory Orders increased by 0.5 percent in July. US crude oil inventories declined by 7.4 mn bbl for w/e 31 Aug. UKs Halifax House Price Index (HPI) declined by 0.4 percent in August. LME Copper inventories declined 0.8 pc in yesterdays trading session.
INR/$ (Spot) Last 55.66 Prev day 0.4 w-o-w -0.1 m-o-m -0.9 y-o-y -17.1
st

Market Highlights (% change)

as on 6 September, 2012

Asian markets are trading on a upbeat note after European Central bank policy makers announced an unlimited bond buying program to reduce the borrowing cost for the debt ridden nations of the region thereby raising the demand for the riskier assets. US Challenger Job Cuts declined by 36.9 percent in August as against a decline of 44.5 percent in July. Automatic Data Processing, Inc. (ADP) Non-Farm Employment Change increased to 201,000 in August from previous rise of 173,000 a month ago. Unemployment Claims declined by 12,000 to 365,000 for the week ending on 31st August as compared to rise of 377,000 in prior week. The Institute for Supply Management (ISM) Non-Manufacturing Purchasing Managers' Index (PMI) increased by 1.1 points to 53.7-mark in last month with respect to previous level of 52.6 in July. The US Dollar Index (DX) declined 0.2 percent on the back of rise in the risk appetite on positive outcome of the European Central bank (ECB) meeting held yesterday where policymakers agreed on unlimited bond buying program to reduce the borrowing costs of the sovereign debt. This led to fall in the demand for the low yielding currency that is DX. US equities traded on a firm note taking positive cues from the ECB meeting held yesterday amidst favorable economic data from the US economy. The currency touched a low of 81.01 and closed at 81.03 on Thursday. The Indian Rupee appreciated by 0.4 percent in yesterdays trading session. The currency appreciated taking cues from upbeat global market sentiments along with weakness in the DX. Additionally, expectations of unlimited bond buying plan by the European Central Bank (ECB) policymakers to curtail Euro Zone debt crisis also supported an upside in the currency. However, sharp upside in the currency was restricted as a result of decline in FII inflows coupled with dollar demand from the oil companies. It touched an intra-day high of 55.62 in yesterdays trade and closed at 55.65 on Thursday. For the current month, FII outflows totaled at Rs 38.60 crores till 6th September 2012. While year to date basis, net capital inflows stood at Rs 63,031.10 crores till 6th September 2012.

$/Euro (Spot)

1.2628

0.2

1.0

2.6

-10.4

Dollar Index

81.03

-0.2

-0.8

-2.0

7.2

NIFTY

5238.4

0.2

-1.4

-1.6

2.2

SENSEX

17346.3

0.2

-1.1

-1.2

1.6

DJIA

13292.0

1.9

2.2

1.0

16.4

S&P

1432.12

2.0

2.3

2.7

22.9

Source: Reuters

The Euro increased by 0.2 percent owing to positive statement announced in the ECB meeting by President Mario Draghi that policy makers have agreed on unlimited bond buying program to stem the rising Euro zone debt. Also, favorable economic data from the region added to the gains of currency. It touched a high of 1.265 and closed at 1.2628 in yesterdays session. European Revised Gross Domestic Product (GDP) remained unchanged at -0.2 percent in Q2 of 2012. German Factory Orders increased by 0.5 percent in July from previous decline of 1.6 percent a month ago. European Minimum Bid Rate kept unchanged at 0.75 percent for the month of September. UKs Halifax House Price Index (HPI) declined by 0.4 percent in August as against a previous decline of 0.6 percent in July. Asset Purchase Facility remained unchanged at 375 billion Pounds in the current month. Bank of England (BOE) kept the Official Bank Rate unchanged at 0.5 percent for the month of September.

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Commodities Daily Report

Friday| September 7, 2012

International Commodities
Bullion Gold
Spot gold prices increased 0.5 percent due to affirmative statement by the ECB president Mario Draghi that policy makers have agreed on unlimited bond buying program to reduce interest rates for the struggling nations and fight speculation of a breakup of Euro. Further positive US economic data of jobless claims also added to the gains in the gold prices. Additionally weakness in the US Dollar Index DX also supported an upside in the gold prices. The yellow metal touched a high of $1,695/oz and closed at $1,700.9/oz in yesterdays session. On the MCX, Gold October contract increased by 0.1 percent tracking firmness in the spot gold prices. However, appreciation in the Indian rupee capped sharp gain in the gold prices. Gold prices on the MCX closed at Rs.31,467/10 gms on Thursday after touching a historical high of Rs.31,818/10 gms yesterday. Market Highlights - Gold (% change)
Gold Gold (Spot) Gold (Spot Mumbai) Gold (LBMAPM Fix) Comex Gold (Dec12) MCX Gold (Oct12) Unit $/oz Rs/10 gms $/oz Last 1701.0 31800.0 Prev day 0.5 1.0 as on 6 September, 2012 WoW 2.7 3.6 MoM 5.2 7.0 YoY -6.4 15.6

1701.0

0.7

2.4

5.3

-6.0

$/oz Rs /10 gms

1702.6

0.7

3.0

5.3

-6.2

31467.0

0.0

2.0

5.0

15.8

Source: Reuters

Market Highlights - Silver (% change)

as on 6 September, 2012 WoW 7.3 6.8 7.2 7.4 9.5 MoM 16.1 15.8 17.3 16.1 16.5 YoY -21.4 -1.8 -19.8 -21.5 -3.1

Silver
Taking cues from rise in gold prices and weakness in the DX, Spot silver prices gained by 1.1 percent in yesterdays trade. However, sharp upside in the silver prices was capped on the back of weakness in the copper prices. The white metal touched an intra-day high of $32.3/oz and closed at $32.10/oz in yesterdays trading session. In the Indian markets, prices gained by 2.3 percent on account of depreciation in the Indian Rupee and closed at Rs. 62,339/kg after touching an intra-day high of Rs.63,430/kg on Thursday.

Silver Silver (Spot) Silver (Spot -Mumbai) Silver (LBMA) Comex Silver (Dec12) MCX Silver (Dec12)

Unit $/oz Rs/1 kg $/oz $/ oz Rs / kg

Last 32.6 62540.0 3287.0 3261.9 62339.0

Prev day 1.1 1.9 2.4 1.1 2.8

Source: Reuters

Outlook
In todays session we expect precious metals to with upward bias on the back of strength in the global market sentiments along with weakness in the DX. Additionally, positive statement by the ECB president that policy makers have agreed to the unlimited bond buying plan to reduce the borrowing costs will support upside in the prices. In the Indian markets appreciation in the Rupee will cap sharp rise in the prices. Technical Outlook
Unit Spot Gold MCX Gold Oct12 Spot Silver MCX Silver Dec12 $/oz Rs/10 gms $/oz Rs/kg valid for September 7, 2012 Support 1686/1680 31340/31250 32.10/31.95 62000/61700 Resistance 1697/1702 31560/31660 32.40/32.56 62600/62900

Technical Chart Spot Gold

Source: Telequote

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Commodities Daily Report

Friday| September 7, 2012

International Commodities
Energy Crude Oil
Nymex crude oil prices increased around 0.2 percent yesterday taking cues from ECB President Mario Draghi statement on agreement for unlimited bond buying from the Euro Zone policymakers to curtail its debt crisis. Additionally, more than expected decline in US crude oil inventories along with weakness in the DX also supported an upside in the prices. Crude oil prices touched an intra-day high of $97.71/bbl and closed at $95.50/bbl in yesterdays trading session. On the domestic bourses, prices gained by 0.2 percent and closed at Rs.5,339/bbl on Thursday. EIA Inventories Data As per the US Energy Department (EIA) report last night, US crude oil inventories declined more than expected by 7.4 million barrels to 357.10 million barrels for the week ending on 31st August 2012. Gasoline stocks fell by 2.3 million barrels to 198.90 million barrels and whereas distillate stockpiles gained by 993,000 barrels to 127.10 million barrels for the last week. Market Highlights - Crude Oil (% change)
Crude Oil WTI (Spot) Brent (Spot) Nymex Crude (Oct12) ICE Brent Crude (Oct12) MCX Crude (Sept12) Unit $/bbl $/bbl Last 95.6 114.3 Prev. day 0.2 0.7 WoW 1.0 1.1 as on 6 September, 2012 MoM 2.3 0.0 YoY 7.0 -4.3

$/bbl

95.5

0.2

1.0

2.3

6.9

$/bbl

113.5

0.4

0.7

0.2

-2.0

Rs/bbl

5339.0

0.2

1.2

3.2

29.4

Source: Reuters

Market Highlights - Natural Gas

Natural Gas (NG) Nymex NG MCX NG (Sept12) Unit $/mmbtu Rs/ mmbtu Last 2.748 157.8

(% change)

as on 6 September, 2012

Prev. day -1.89 0.51

WoW -0.43 2.47

MoM -6.28 -1.50

YoY -30.01 -12.91

Source: Reuters

Technical Chart Nymex Crude Oil

Natural Gas
EIA Inventories Data US Energy Information Administration (EIA) released its weekly inventories yesterday and US natural gas inventory has increased as expected by 28 billion cubic feet (bcf) which stood at 3.402 trillion cubic feet for the week ending on 31st August 2012. Outlook
Source: Telequote

In todays trade, we expect crude oil prices to trade on a sideways bias due to upbeat global market sentiments, more than expected decline in US crude oil inventories along with weakness in the DX. While on the other hand, expectations that crude oil prices are trading at a very high price and will lead to slowdown can add downside pressure on the crude oil prices. Technical Outlook
Unit valid for September 7, 2012 Support Resistance

Technical Chart Nymex Natural Gas

NYMEX Crude Oil MCX Crude Sept12

$/bbl Rs/bbl

94.25/93.50 5300/5260

95.45/96.15 5370/5410

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Commodities Daily Report

Friday| September 7, 2012

International Commodities
Base Metals
The base metals pack traded on a mixed note in the yesterdays trading session. However, sharp downside in the prices was capped on the back of decline in the LME inventories coupled with weakness in the DX. Additionally, sharp downside in the prices was cushioned on account of upbeat global market sentiments. In the Indian markets appreciation in the Rupee added downside pressure on the prices. Copper Copper, the leader of the base metals complex declined by 0.3 percent in yesterdays trading session. However, sharp downside in the prices was cushioned on the back of upbeat global market sentiments along with weakness in the DX. Additionally, decline in LME Copper inventories by 0.8 percent which stood at 213,225 tonnes also restricted sharp fall in the prices. The red metal touched an intra-day low of $7666/tonne and closed at $7,708.80/tonne in yesterdays trading session. On the domestic front, prices declined by 0.9 percent on account of appreciation in the Indian Rupee and closed at Rs.433.50/kg after touching an intra-day low of Rs433.10./kg on Thursday. Outlook From the intra-day perspective, we expect base metal prices to trade on a bullish note on the back of positive outcome for the unlimited bond buying from the European Central Bank (ECB) policymakers. Additionally, upbeat global market sentiments along with weakness in the DX will also support upside in the prices. In the Indian markets, appreciation in the Rupee will cap sharp gains in the prices. Technical Outlook
Unit MCX Copper Nov12 Rs /kg valid for September 7, 2012

Market Highlights - Base Metals (% change)

Unit LME Copper (3 month) MCX Copper (Nov12) LME Aluminum (3 month) MCX Aluminum (Sept12) LME Nickel (3 month) MCX Nickel (Sept12) LME Lead (3 month) MCX Lead (Sept12) LME Zinc (3 month) MCX Zinc (Sept12) Rs /kg 105.2 $/tonne 1905.3 Rs /kg 113.1 $/tonne 2048.0 Rs /kg 896.9 $/tonne 16071.0 Rs /kg 109.0 $/tonne 1974.5 Rs/kg 433.5 $/tonne Last 7708.8

as on 6 September, 2012 WoW 1.8 MoM 2.2 YoY -15.2

Prev. day -0.3

-0.9

2.4

3.8

2.6

0.6

5.1

3.9

-17.9

-0.2

5.3

5.0

-1.0

0.0

0.3

3.6

-26.3

-0.5

0.6

3.9

-10.8

1.0

5.1

6.8

-15.4

0.3

4.2

6.9

0.1

0.9

3.6

2.5

-15.0

0.2

4.0

2.5

2.2

Source: Reuters

LME Inventories
Unit Copper Aluminum Nickel Zinc Lead tonnes tonnes tonnes tonnes tonnes 6 September 213,225 4,866,400 121,152 945,250 304,750
th

5 September 215,050 4,874,625 120,054 948,050 304,475

th

Actual Change -1,825 -8,225 1,098 -2,800 275

(%) Change -0.8 -0.2 0.9 -0.3 0.1

Source: Reuters

Technical Chart LME Copper

Support 431/429 Resistance 436/440

MCX Zinc Sept12

Rs /kg

104.60/104.0

105.60/106.10

MCX Lead Sept12

Rs /kg

112.50/112.90

113.60/114.20

MCX Aluminum Sept12

Rs /kg

108.50/108.0

109.50/110.0

MCX Nickel Sept12

Rs /kg

890/884

904/911

Source: Telequote

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Commodities Daily Report

Friday| September 7, 2012

International Commodities
Important Events for Today

Indicator Manufacturing Production m/m PPI Input m/m Consumer Inflation Expectations German Industrial Production m/m Non-Farm Employment Change Unemployment Rate Average Hourly Earnings m/m NIESR GDP Estimate

Country UK UK UK Euro US US US UK

Time (IST) 2:00pm 2:00pm 2:00pm 3:30pm 6:00pm 6:00pm 6:00pm 7:30pm

Actual -

Forecast 2.1% 1.6% 0.1% 121K 8.3% 0.2% -

Previous -2.9% 1.3% 3.7% -0.9% 163K 8.3% 0.1% -0.2%

Impact High High Medium Medium High High Medium Medium

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