Commodities Daily Report

Wednesday| October 17, 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

Wednesday| October 17, 2012

International Commodities
Overview
US CPI remained unchanged at 0.1 percent in the month of September. Italian Trade Balance was at a deficit of 0.6 billion Euros in August. US Industrial Production increased by 0.4 percent in September. German ZEW Economic Sentiment was at -11.5-mark in October.

Market Highlights (% change)

Last INR/$ (Spot)
52.81

as on 16 October, 2012

Prev day
0.3

w-o-w
-0.2

m-o-m
2.0

y-o-y
-7.3

Asian markets are trading on a firm note on the back of optimism that Spain might seek for a bailout and favorable industrial output from the US. Further, German officials backing the Spain bailout is also creating positive market sentiments. US Core Consumer Price Index (CPI) remained unchanged at 0.1 percent in the month of September. CPI also remained unchanged at 0.6 percent in the last month. Treasury International Capital (TIC) Long-Term Purchases increased by $90 billion in August as against a previous rise of $67.2 billion a month ago. Capacity Utilization Rate increased by 78.3 percent in September from earlier rise of 78 percent in August. Industrial Production increased by 0.4 percent in September as compared to previous decline of 1.4 percent in August. National Association of Home Builders (NAHB) Housing Market Index increased by 1 point to 41-mark in October with respect to rise of 40-level in September. US Dollar Index declined 0.4 percent on the back of rise in the risk appetite amongst the markets participants as optimism rose that Spain might seek for a bailout. Further, better than US earnings also created bullish sentiments thereby reducing the demand for the low yielding currency that is US Dollar Index (DX). US equities ended on positive note taking cues from better than expected company earnings and industrial production and thus creating upbeat market sentiments. The currency touched a low of 79.37 and closed at 79.46 levels on Tuesday. The Indian Rupee appreciated around 0.3 percent in the yesterdays trading session. The currency appreciated taking cues from rise in risk appetite in the global markets along with weakness in the DX in the early part of the trade. Additionally, selling of dollars from foreign banks and increasing foreign capital inflows also acted as a positive factor for the currency. However, sharp upside in the currency was cushioned as a result of weak domestic market sentiments coupled with dollar demand from importers. The currency touched an intra-day high of 52.775 and closed at 52.87 on Tuesday. For the current month FII inflows totaled at Rs. 10997.40 crores till 16 October 2012. While year to date basis, net capital inflows stood at Rs. th 93,328.20 crores till 16 October 2012.
th

$/Euro (Spot)

1.3052

0.8

1.3

0.0

-5.0

Dollar Index

79.46

-0.4

-0.8

0.1

2.6

NIFTY

5648.0

-0.7

-1.0

0.9

10.4

SENSEX

18577.7

-0.7

-1.1

0.4

9.1

DJIA

13551.8

1.0

0.6

-0.1

18.9

S&P

1454.92

1.0

0.9

-0.7

18.8

Source: Reuters

Euro rebounded from the earlier losses as optimism rose that Spain might seek for a bailout easing sovereign debt crisis. Additionally weakness in the DX along with favorable data from the region supported upside in the currency. The currency touched a high of 1.306 and closed at 1.3052 on Tuesday. Italian Trade Balance was at a deficit of 0.6 billion Euros in August as against a surplus of 4.51 billion Euros a month ago. German ZEW Economic Sentiment was at -11.5-mark in October from previous fall of 18.2-level in September. Consumer Price Index (CPI) was at 2.6 percent in September as compared to rise of 2.7 percent in August. Core CPI remained unchanged at 1.5 percent in the month of September. European ZEW Economic Sentiment was at -1.4-level in October with respect to previous decline of 3.8-mark in September. European Trade Balance was at a surplus of 9.9 billion Euros in August when compared to earlier surplus of 7.2 billion Euros in prior month. UKs Consumer Price Index (CPI) was at 2.2 percent in September as against a rise of 2.5 percent in August. Producer Price Index (PPI) Input declined by 0.2 percent in September from previous rise of 1.9 percent in August.

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Commodities Daily Report

Wednesday| October 17, 2012

Bullion Gold

International Commodities

Market Highlights - Gold (% change) Spot gold prices erased earlier gains and settled 0.7 percent higher on reports that Spain might seek for a bailout easing the sovereign debt crisis and as US consumer prices did not rise as expected. This reduced fears of US Federal Reserve curtailing stimulus measures amongst market participants and thus creating positive sentiments. Weakness in the US Dollar Index also supported an upside in the gold prices. The yellow metal touched an intra-day high of $1,748/oz and closed at $1,747.19/oz on Tuesday. On the MCX, Gold October contract gained 0.2 percent taking cues from firmness in the spot gold. However, sharp rise in the prices of Gold on the MCX were capped due to appreciation in the Indian Rupee and closed at Rs.31,040/10 gms on Tuesday after touching an intra-day high of Rs. 31,060/ 10gms.
Gold Gold (Spot) Gold (Spot -Mumbai) Gold (LBMA-PM Fix) Comex Gold (Dec12) MCX Gold (Dec12) Unit $/oz Rs/10 gms $/oz Last
1747.2

as on 16 October, 2012 Prev day

0.7

WoW
-0.9

MoM
-1.3

YoY
4.7

30750.0

-0.5

-1.5

-3.2

15.2

1746.5

0.6

-1.6

-1.3

3.8

$/oz Rs /10 gms

1744.7

0.5

-1.0

-1.3

4.1

31040.0

0.2

-0.9

-2.8

15.7

Source: Reuters

Silver
Spot silver prices gained 0.7 percent taking cues from bullishness in the spot gold prices along with gains in the base metals. Additionally, weakness in the DX also acted as a supportive factor for the upside in the silver prices. The white metal touched an intra-day high of $33.02/oz and closed at $32.93/oz on Tuesday. In the Indian markets, MCX silver prices gained 0.1 percent tracking firmness in the spot silver and closed at Rs. 60,031/kg after touching an intra-day high of Rs.60,218/kg on Tuesday. However, appreciation in the Indian rupee capped 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
32.9 60550.0 3283.0

as on 16 October, 2012 WoW

-2.7 -1.2 -3.1

Prev day
0.7 -1.0 -1.2

MoM
-5.3 -3.4 -3.6

YoY
3.7 12.8 1.6

3292.2

0.7

-3.0

-5.0

3.6

60031.0

0.1

-2.7

-6.9

13.8

Source: Reuters

Outlook
In the intraday, we expect precious metals to trade on a firm note on the back of positive global market sentiments on optimism that Spain might seek for bailout easing the debt worries of the Euro zone along with weakness in the DX. In the domestic markets appreciation in the Indian rupee will cap sharp rise in the precious metals on the MCX. Technical Outlook
Unit valid for October 17, 2012 Support Resistance

Technical Chart Spot Gold

Spot Gold MCX Gold Dec12 Spot Silver MCX Silver Dec12

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

1745/1738 30920/30800 32.91/32.79 59780/59550

1757/1761 31120/31200
Source: Telequote

33.19/33.29 60280/60460

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Commodities Daily Report

Wednesday| October 17, 2012

International Commodities
Energy Crude Oil
Nymex crude oil prices gained around 0.3 percent yesterday taking cues from expectations for Spanish bailout after German Chancellor Angela Merkels statement which eased countrys resistance for Spains bailout, coupled with weakness in the DX. Additionally, favourable economic data from the US and Euro Zone also supported an upside in the prices. However, sharp upside in the prices was capped as a result of rise in US crude oil inventories. Crude oil prices touched an intra-day high of $92.76/bbl and closed at $92.1/bbl in yesterdays trading session. On the domestic bourses, prices gained by 0.6 percent and closed at Rs.4,859/bbl after touching an intra-day high of Rs.4,884/bbl on Tuesday. API Inventories Data As per the American Petroleum Institute (API) report last night, US crude oil inventories increased more than expected by 3.7 million barrels to 368.26 million barrels for the week ending on 12th October 2012. Gasoline inventories declined around 1.18 million barrels to 199.16 million barrels and whereas distillate inventories gained by 1.8 million barrels to 122.58 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 1.7 million barrels for the week ending on 12th October 2012. Gasoline stocks are expected to remain gain by 0.5 million barrels whereas distillate inventories are expected to drop by 1.2 million barrels for the same period. Outlook We expect crude oil prices to trade on firm note taking cues from positive industrial output from the US thereby anticipating rise increase in the demand. Further, optimism of Spain bailout and as Germany eases its resistance for the same is likely to support an upside in the crude prices. However, ample US supplies of crude oil might restrict sharp gains. Further, weakness in the DX might also support an upside in the crude oil prices. Technical Outlook
Unit NYMEX Crude Oil MCX Crude Oct12 $/bbl Rs/bbl valid for October 17, 2012
Source: Telequote

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
92.1 116.4

as on 16 October, 2012 WoW

-0.4 1.4

Prev. day
0.2 0.5

MoM
-3.4 2.6

YoY
6.5 2.2

$/bbl

92.1

0.3

-0.3

-3.4

6.6

$/bbl

115.1

-0.6

0.5

2.7

4.5

Rs/bbl

4859.0

0.6

-0.6

-6.2

14.2

Source: Reuters

Market Highlights - Natural Gas (% change)

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

as on 16 October, 2012

Unit $/mmbtu Rs/ mmbtu

Last
3.438 181.8

Prev. day
-1.43 -1.99

WoW
-1.12 -1.41

MoM
16.78 13.84

YoY
-6.90 0.17

Source: Reuters

Technical Chart Nymex Crude Oil

Technical Chart Nymex Natural Gas

Support 91.64/90.69 4830/4780

Resistance 92.97/93.73 4900/4940

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Commodities Daily Report

Wednesday| October 17, 2012

International Commodities
Base Metals
The base metals pack traded on a mixed note in the yesterdays trading session on the back of mixed LME inventories. However, sharp downside in the prices was cushioned as a result of rise in risk appetite in the global market sentiments along with weakness in the DX. In the Indian markets, appreciation in the Rupee added further downside pressure on the prices. Market Highlights - Base Metals (% change)
Unit LME Copper (3 month) MCX Copper (Nov12) LME Aluminum (3 month) MCX Aluminum Rs /kg
103.2 -1.0 -4.0 -10.8 -4.2

as on 16 October, 2012 WoW

-0.2

Last
8141.8

Prev. day
0.2

MoM
-1.9

YoY
9.1

$/tonne

Rs/kg

434.4

0.0

-0.1

-4.5

18.0

$/tonne

1958.0

-0.8

-4.4

-8.9

-11.2

Copper
Copper, the leader of the base metals complex gained 0.2 percent on the back of favourable US industrial output and after Moodys investor Service kept Spain investment grade at Baa3 one level above junk easing sovereign debt crisis. There were fears that the rating could be cut to the junk status. This created positive global market sentiments and weakened US Dollar Index thus supporting an upside in the red metal prices. However, sharp rise in e prices were capped on the back of strength in the DX. However, decline in LME Copper inventories by 0.7 percent also added to the gains in the copper prices. LME Copper stocks stood at 210,725 tonnes. The red metal touched an intra-day high $8,181/tonne and closed at $8,141.75/tonne in yesterdays session. On the domestic front, prices ended on a flat note and closed at Rs.434.4/kg after touching a high of Rs.436/kg on Tuesday. Depreciation in the Indian rupee also supported an upside in the copper prices on MCX. Outlook Base metal prices in todays session are expected to trade on a positive note on the back of easing of debt concerns of the Euro zone as Spain is expected to seek for a bailout and German leaders supporting the move is likely to create positive sentiments. Additionally, weakness in the DX will also act a as supportive factor for the base metals. However, in the domestic markets appreciation in the Indian rupee will cap sharp gains 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 17, 2012 Support 432/430 99.0/98.40 111.50/110.80 102.50/101.80 888/880 Resistance 436/439 100.30/101.0 113.0/113.80 103.80/104.50

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

$/tonne

16876.0

-1.6

-6.0

-4.7

-10.5

Rs /kg

893.5

-2.1

-5.7

-6.9

-3.9

$/tonne

2122.5

0.3

-5.8

-6.6

8.2

Rs /kg

112.1

0.0

-5.4

-8.3

16.5

$/tonne

1906.5

-0.6

-5.3

-9.2

0.2

Rs /kg

99.6

-0.8

-5.4

-11.3

7.1

LME Inventories
Unit Copper Aluminum Nickel Zinc Lead tonnes tonnes tonnes tonnes tonnes 16th October
210,725 5,065,800 128,544 1,061,175 300,425

15th October
212,275 5,064,950 126,342 1,036,625 301,700

Actual Change
-1,550 850 2,202 24,550 -1,275

(%) Change
-0.7 0.0 1.7 2.4 -0.4 Source: Reuters

Technical Chart MCX Copper

Source: Telequote

900/907

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Commodities Daily Report

Wednesday| October 17, 2012

International Commodities
Important Events for Today

Indicator Claimant Count Change MPC Meeting Minutes Unemployment Rate MPC Member Tucker Speaks Building Permits Housing Starts Crude Oil Inventories

Country UK UK UK UK US US US

Time (IST) 2:00pm 2:00pm 2:00pm 2:45pm 6:00pm 6:00pm 8:00pm

Actual -

Forecast -0.2K 0-0-9 8.1% 0.81M 0.77M 1.7M

Previous -15.0K 0-0-9 8.1% 0.80M 0.75M 1.7M

Impact High High Medium Medium High Medium Medium

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