Commodities Daily Report

Friday| February 8, 2013

International Commodities

Content
Overview Precious Metals Energy Base Metals Important Events for today

Research Team
Nalini Rao - Sr. Research Analyst [email protected] (022) 2921 2000 Extn. 6135

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

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Commodities Daily Report

International Commodities
Overview
US Unemployment Claims declined to 366,000 w/e on 1st Feb 2013. German Industrial Production increased by 0.3 percent in December. Indian government lowered GDP forecast to 5 for FY 2012-13. UKs Manufacturing Production increased by 1.6 percent in Dec.

Market Highlights (% change)

as on 7 February, 2013 w-o-w 0.1 m-o-m 2.2 y-o-y -7.8

US Unemployment Claims declined by 5,000 to 366,000 for the week st ending on 1 February from earlier rise of 371,000 in prior week. Prelim Nonfarm Productivity declined by 2 percent in Q4 of 2012 as against a rise of 2.9 percent in Q3 of 2012. Prelim Unit Labor Costs rose by 4.5 percent in last quarter of 2012 as compared to decline of 1.9 percent a quarter ago. Indian government has lowered the Gross Domestic Product (GDP) forecast to 5 percent for Fiscal Year 2012-2013 from previous estimates of 6.2 percent. Farm growth in the country is expected to grow by 1.8 percent and manufacturing growth forecasted at 1.9 percent in the Financial Year 2012-13. Also, International Monetary Fund (IMF) on Wednesday has lowered Indias growth forecast to 5.4 percent for the current fiscal year from earlier estimates of 6.2 percent. Asian markets are trading on a mixed note taking cues from positive exports data from the China and are also taking cues from the comments of the European Central Bank President Mario Draghi that recovery in the region might be seen in 2013 but there are more downside risks to the economy. US Dollar Index (DX) gained by 0.6 percent yesterday on account of rise in risk aversion in the global market sentiments which led to rise in demand for the low yielding currency. Additionally, statement from European Central Bank President Mario Draghi that strength in the Euro as a currency could harm the economic growth of the region as supported an upside in the DX. However, sharp upside in the currency was capped as a result of US unemployment claims data coming on a positive note. The currency touched an intra-day high of 80.35 and closed at 80.26 on Thursday. The Indian Rupee depreciated by 0.1 percent in yesterdays trading session. The currency depreciated on the back of government lowering the GDP growth forecast for fiscal year 2012-13. Additionally, weak domestic market sentiments also exerted downside pressure on the currency. However, sharp downside in the currency was cushioned as a result of $2.1 billion share auction in the NTPC Limited. The currency touched an intra-day low of 53.325 and closed at 53.22 on Thursday. For the month of January 2013, FII inflows totaled at Rs.10,856.70 crores th ($2,083.86 million) as on 7 February 2013. Year to date basis, net capital th inflows stood at Rs.32,915.70 crores ($6,098.20 million) till 7 February 2013.

$/Euro (Spot)

1.3396

-0.9

-1.3

1.0

1.0

Dollar Index NIFTY

80.26

0.6

1.3

0.6

1.9

5938.8

-0.3

-1.6

-0.5

10.6

SENSEX

19580.3

-0.3

-1.6

-0.4

10.6

DJIA

13944.05

-0.3

0.6

3.5

8.2

S&P

1509.4

-0.2

0.8

3.2

11.9

Source: Reuters

The Euro depreciated by 0.9 percent yesterday on the back of European Central Bank Mario Draghi statement that strength in the currency will hamper the economic growth in the region. Also, strength in the DX acted as a negative factor for the currency. However, sharp downside in the currency was cushioned as a result of French Trade Balance was at a deficit of 5.3 billion Euros in December as against a previous deficit of 4.3 billion Euros in November. German Industrial Production increased by 0.3 percent in December from decline of 0.2 percent a month ago. European Minimum Bid Rate was kept unchanged at 0.75 percent in the month of February. The Euro touched an intraday low of 1.3369 and closed at 1.3396 against dollar on Thursday.

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Commodities Daily Report

Bullion Gold

International Commodities

Spot gold prices pared gains of the previous day and declined 0.4 percent in the yesterdays session. This was on account of ongoing European Central Bank (ECB) meeting which would give clues regarding the monetary policy of the region and further direction of the currency, Euro. A sell off was witnessed on the back of ECB President Mario Draghi comments that the economy is recovering but the strength in the Euro might dampen this recovery. Strength in the DX also pushed the prices of gold downwards. The yellow metal touched an intra-day low of $ 1662.8 per ounce and closed at $ 1,670.69 per ounce on Thursday. On the MCX, Gold April contract ended 0.3 percent higher on the back of depreciation in the Indian rupee. Gold prices on the MCX closed at Rs. 30,796/10 gms on Thursday after touching an intra-day high of Rs. 30,890/ 10gms.

Market Highlights - Gold (% change)

as on 7 February, 2013 Prev. day

WoW
0.5

MoM
1.5

YoY
-4.3

Gold (Spot Mumbai) Gold (LBMA-PM Fix) Comex Gold (April13) MCX Gold (April13)

Rs/10 gms $/oz

30360.0

0.2

0.4

-0.4

10.0

1668.0

-0.4

0.2

1.4

-3.2

$/oz

1670.4

-0.4

0.6

1.5

-4.4

Rs /10 gms

30796.0

0.3

3.1

-0.2

#N/A

Silver
Spot silver prices declined 1.2 percent in yesterdays session. The prices tracked the weakness in the spot gold prices. Weakness in the base metals pack along with firmness in the DX also exerted downside pressure on the silver prices. The white metal touched an intra-day low of $ 31.26/oz and closed at $ 31.4 per oz on Thursday. In the Indian markets, MCX silver prices ended 0.6 percent lower and closed at Rs. 58,041/kg on Thursday and touched an intra-day low of Rs 57,762/ kg. Weakness in the spot silver prices exerted downside pressure on the silver prices. However, depreciation in the Indian rupee supported an upside in the silver prices on MCX.
Source: Reuters

Market Highlights - Silver (% change)

as on 7 February, 2013 WoW

Prev day
-1.2

MoM
4.4

YoY
-8.0

58880.0

0.1

-0.7

0.9

5.9

$/oz $/ oz

3175.0

0.2

-0.9

5.3

-4.6

3138.7

-1.5

0.2

4.5

-8.1

Outlook
In todays session, we expect bullion prices to trade in the negative territory taking cues from weak global market sentiments created after ECB President said that economic activity in the euro area is likely to gain momentum in later part of 2013 but there are more negative risks than the positive ones. This is expected to create risk aversion. However, weakness in the DX is expected to cushion fall in the prices. In the Indian markets depreciation in the Rupee will cushion fall in the MCX prices of precious metals. Technical Outlook
Unit Spot Gold MCX Gold Apr13 Spot Silver MCX Silver Mar13 $/oz Rs/10 gms $/oz Rs/kg valid for February 8, 2013 Support 1662/1652 30724/30557 31.15/30.87 57650/57260 Resistance 1682/1693 30920/31045 31.58/31.83 58270/58540

Rs / kg

58041.0

-0.6

0.3

0.1

#N/A

Source: Reuters

Technical Chart Spot Gold

Source: Telequote

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Commodities Daily Report

Energy Crude Oil

International Commodities
Market Highlights - Crude Oil (% change)
Crude Oil WTI (Spot) Brent (Spot) Nymex Crude (March13) ICE Brent Crude (March13) MCX Crude (Feb 13) Unit $/bbl $/bbl $/bbl Last
95.8 118.2 95.8

Nymex crude oil prices declined around 0.8 percent yesterday taking cues from European Central Bank President Mario Draghi statement that strength in the Euro as a currency, can affect the economic growth in the region which led to expectations of fall in demand for the fuel. Additionally, decline in total petroleum demand in US by 3.4 percent to 18.1million barrels a day in last week, fall in gasoline consumption by 1 percent to 8.42 million barrels a day for the week ending on 1st February 2013 along with strength in the DX also exerted downside pressure on the crude oil prices. However, sharp downside in the crude prices was cushioned on account of US jobless claims coming on a favorable note. Oil prices touched an intra-day low of $95.54/bbl and closed at $95.83/bbl in yesterdays trading session. On the domestic bourses, prices declined by 0.1 percent and closed at Rs.5,133/bbl after touching an intra-day low of Rs.5,121/bbl on Thursday. However, depreciation in the Indian Rupee prevented further fall in the crude oil prices.

as on 7 February, 2013 WoW

Prev. day
-0.6 0.1 -0.8

MoM
2.8 3.8 2.8

YoY
-2.7 0.4 -2.6

$/bbl

117.2

0.4

1.5

5.2

0.9

Rs/bbl

5133.0

-0.1

-1.3

-0.3

#N/A

Source: Reuters

Market Highlights - Natural Gas (% change)

as on 7 February, 2013

Unit $/mmbtu Rs/ mmbtu

Last 3.286 178.5

Prev. day -4.09 -2.94

WoW -1.56 0.17

MoM -0.12 -1.38

YoY 27.17 43.49

Natural gas
Nymex natural gas prices declined by more than 4 percent yesterday on the back of less than expected decline in US natural gas inventories. Additionally, strength in the DX also added downside pressure on the prices. However, sharp further downside in the prices was prevented on account of forecast for cooler winter weather ahead. Gas prices touched an intra-day low of $3.282/mmbtu and closed at $178.5/mmbtu on Thursday. On the domestic front, prices declined around 3 percent and closed at Rs.178.5/mmbtu after touching an intra-day low of Rs.177.6/mmbtu in yesterdays trading session. Depreciation in the Indian Rupee restricted fall in the gas prices. EIA Inventories Data US Energy Information Administration (EIA) released its weekly inventories yesterday and US natural gas inventory declined less than expected by 118 billion cubic feet (bcf) which stood at 2.864 trillion st cubic feet for the week ending on 1 February 2013. Outlook In todays session, we expect crude oil prices to trade lower on the back of weak global market sentiments and as Saudi Arabia kept the production output steady near 9 million barrels to maintain the OPEC output. Thus limited concerns over the supplies are expected to keep the crude oil prices under pressure. Depreciation in the Indian Rupee will support an upside in the crude oil prices on the MCX. Technical Outlook valid for February 8, 2013
Unit NYMEX Crude Oil MCX Crude Feb 13 $/bbl Rs/bbl Support 95.20/94.50 5107/5082 Resistance 96.50/97.30 5155/5180

Technical Chart NYMEX Crude Oil

Source: Telequote

Technical Chart NYMEX Natural Gas

Source: Telequote

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Commodities Daily Report

Base Metals

International Commodities
Market Highlights - Base Metals (% change)
Unit LME Copper (3 month) MCX Copper (Feb13) LME Aluminum (3 month) MCX Aluminum (Feb13) LME Nickel (3 month) MCX Nickel (Feb13) LME Lead (3 month) MCX Lead Feb13) LME Zinc (3 month) $/tonne
2157.3 -0.4 0.5 6.4 1.7

The base metals pack traded on bearish note in yesterdays session except for aluminium which gained in yesterdays session. The decline in the base metals was on account of comments by the ECB President raising concerns about the strength in the currency, Euro. Strength in the DX also supported decline in the base metal prices. Subdued trading activity in Chinese market ahead of Lunar New Year festival in the next week also added to the losses in the base metals. Depreciation in the Indian Rupee cushioned fall in the base metals pack on the MCX.

as on 7 February, 2013 WoW

Last
8210.0

Prev. day
-0.3

MoM
1.5

YoY
-3.5

$/tonne

Rs/kg

441.4

0.4

0.3

-2.1

5.8

$/tonne

2103.8

0.1

0.4

1.5

-6.7

Rs /kg

111.4

0.7

0.7

-1.8

-0.9

Copper
Copper prices declined 0.3 percent in yesterdays session. The red metal tracked the comments by the ECB President about the concerns on the strength in the Euro. Dull appetite by the Chinese buyers ahead of Lunar New Year festival and strength in the DX weighed on the prices. Continued rise in the LME inventories of copper also acted as a bearish factor for the copper prices. LME Copper inventories increased 0.37 percent yesterday and stood at 386,500 tonnes on Wednesday as against 38,050 tonnes on 05th February 2013. Copper prices on LME touched an intra-day low of $8,190 per tonne and closed at $8,210 per tonne on Thursday. In the domestic markets MCX copper increased 0.4 percent and closed at Rs. 441.4 per kg on Thursday. Depreciation in the Indian rupee had supported the prices to move upwards.

$/tonne

18140.0

-1.1

-1.4

4.8

-16.5

Rs /kg

972.0

-0.2

-0.8

1.5

-8.0

$/tonne

2415.0

-0.2

-0.6

4.5

10.3

Rs /kg

129.1

0.4

-0.7

1.5

15.2

MCX Zinc (Feb13)

Rs /kg

115.0

0.4

0.9

3.4

8.9

Source: Reuters

LME Inventories
Unit Copper tonnes tonnes tonnes tonnes tonnes 7th February
388900 5138775 150996 1196025 287500

6th February
386500 5147750 150672 1197075 289900

Actual Change 2,400 -8,975 324 -1,050 -2,400

(%) Change 0.62 -0.17 0.22 -0.09 -0.83

Outlook In todays session, we expect base metals to trade higher taking cues from positive exports data from the China along with weakness in DX. However, subdued trading activity in China ahead of Lunar New Year festival in the next week is expected to cap gains in the prices. Depreciation in the Indian Rupee will support an upside in the base metals prices on the MCX. Technical Outlook
Unit MCX Copper Feb13 MCX Zinc Feb 13 MCX Lead Feb 13 MCX Aluminum Feb13 MCX Nickel Feb 13 Rs /kg Rs /kg Rs /kg Rs /kg Rs /kg valid for February 8, 2013 Support 439.65/437.60 114.55/114 128.65/128 110.95/110.40 968/965 Resistance 442.90/444.30 115.40/115.85 129.65/130.20 111.95/112.40 977/983

Aluminum Nickel Zinc Lead

Technical Chart LME Copper

Source: Telequote

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Commodities Daily Report

International Commodities
Important Events for Today

Indicator Current Account FOMC Member Evans Speaks Trade Balance CPI y/y PPI y/y EU Economic Summit Trade Balance

Country Japan US China China China EU US

Time (IST) 5:20 am 6:30 am Tentative 11:00 am 11:00 am Day 2 7:00 pm

Actual 0.10T 29.2B -

Forecast 0.24T 24.3B 2.1% -1.6% -45.8B

Previous 0.23T 31.6B 2.5% -1.9% -48.7B

Impact High Medium High High Medium High High

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