Commodities Daily Report

Monday| October 29, 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 29, 2012

International Commodities
Overview
US Advance GDP rose to 2 percent in Q3 of 2012 Japans Retail Sales increased by 0.4 percent in September. US Core Durable Goods Orders increased by 2 percent in September. US Unemployment Claims fell to 369,000 in the w/e 19th October

Market Highlights (% change)

Last INR/$ (Spot)
53.55

as on 26 October, 2012

Prev day
0.0

w-o-w
0.5

m-o-m
-1.3

y-o-y
-8.5

US markets floor trading will remain closed due to Hurricane Sandy on Monday and Tuesday. Asian markets are trading on a mixed note anticipating stimulus measures to be announced by the Bank of Japan in its meeting to be scheduled tomorrow and favorable US GDP data. However, decline in the Japan retail sales is expected to create bearish market sentiments. US Advance Gross Domestic Product (GDP) rose to 2 percent in Q3 of 2012 from previous rise of 1.3 percent in Q2 of 2012. Advance GDP Price Index also rose to 2.8 percent in Q3 of 2012 as against a rise of 1.6 percent a quarter ago. Revised UoM Consumer Sentiment declined by 0.5 points to 82.6-level in October as compared to previous mark of 83.1 in September. Revised UoM Inflation Expectations remained unchanged at 3.1 percent in the month of October. US dollar Index (DX) gained 0.6 percent due to rise in the risk aversion amongst market participants and thereby increase in the demand for the low yielding currency that is DX. Worries that US Federal Reserve might adjust the stimulus measures after observing favourable data from the US economy supported an upside in the currency. However, some of the gains were erased on Friday after positive US GDP data for the third quarter, increased the risk appetite of the market participants thereby declining the demand for the low yielding currency that is DX. US equities declined in the last week due to poor corporate earnings. However, sharp downside in the US equities were capped due to favorable data from the US economy, the currency touched a weekly high of 80.38 and closed at 80.16 on Friday. The Indian Rupee appreciated by 0.5 percent in the last week. The currency appreciated taking cues from increase in the FII inflows. However, month end dollar demand from the oil refiners and companies along with weak global market sentiments cushioned sharp appreciation in the currency. The currency touched a weekly high of 53.30 and closed at 53.55 on Thursday. For the current month FII inflows totaled at Rs. 12,006.60 crores till 25th October 2012. While year to date basis, net capital inflows stood at Rs. 94,337.40 crores till 25th October 2012.

$/Euro (Spot)

1.2939

0.0

-0.6

0.6

-8.8

Dollar Index

80.16

0.0

0.6

0.2

6.9

NIFTY

5664.3

-0.7

-0.4

-0.7

8.9

SENSEX

18625.3

-0.7

-0.3

-0.7

7.7

DJIA

13107.2

0.0

-1.8

-2.5

7.4

S&P

1411.94

-0.1

-1.5

-1.5

13.7

Source: Reuters

Euro declined 0.6 percent week on week due to uncertainty over Spain bailout and unfavorable data from the region. Additionally, strength in the DX also exerted downside pressure on the currency. The currency touched a weekly low of 1.2881 and closed at 1.2939 on Friday. GfK German Consumer Climate rose by 0.2 points to 6.3-mark in October as against a previous rise of 6.1-level in September. German Import Prices declined by 0.7 percent in September from earlier rise of 1.3 percent in August. Spanish Unemployment Rate rose to 25 percent in Q2 of 2012 as compared to rise of 24.6 percent a quarter ago. European M3 Money Supply increased at slow pace of 2.7 percent in September as against a rise of 2.8 percent in August. Private Loans declined by 0.8 percent in September from previous decline of 0.6 percent a month ago.

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Commodities Daily Report

Monday| October 29, 2012

Bullion Gold

International Commodities

Spot gold prices declined 0.6 percent week on week on the back of risk aversion amongst market participants after observing poor corporate earnings and strength in the DX. Worries that US Federal Reserve might adjust the stimulus measure after viewing favouarable data from the US economy led to bearish market sentiments. However, some of the losses were erased on Friday after favorable US GDP data increased the risk appetite of the investors thereby reducing the demand for the low yielding currency that is DX. This in turn supported an upside in the gold prices. The yellow metal touched a weekly low of $1,698.39/oz and closed at $1,710.74/oz on Friday. On the MCX, Gold October contract fell 0.9 percent taking cues from bearishness in the spot gold. Additionally, appreciation in the Indian rupee also acted as a bearish factor for the gold prices on MCX. Gold prices on the MCX closed at Rs.31,016/10 gms after touching a weekly low of Rs. 30,827/ 10gms. Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, increased 0.15 percent and stood at 1336.30 tonnes till October 26 2012 as against 1334.19 tonnes till October 19th 2012.

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
1710.7

as on 26 October, 2012 Prev day

0.0

WoW
-0.6

MoM
-3.4

YoY
-1.9

30720.0

0.1

-1.4

-2.1

15.5

1716.0

0.0

-1.2

-3.4

-0.1

$/oz Rs /10 gms

1710.9

-0.1

-0.7

-3.4

-2.0

31024.0

0.3

-0.7

-0.6

11.4

Source: Reuters

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
32.1 60200.0 3167.0

as on 26 October, 2012 WoW

0.1 -1.2 -2.0

Prev day
-0.1 -0.2 -1.3

MoM
-7.0 -3.2 -8.6

YoY
-8.6 7.6 -5.6

Silver
Spot silver prices swung between gains and losses and settled 0.1 percent higher week on week. However, sharp gains were capped taking cues bearishness in the spot gold prices and weakness in the base metals pack. Strength in the DX also exerted a downside pressure on the silver prices. The white metal touched a weekly high of $33.03/oz and closed at $32.05/oz on Friday. In the Indian markets, MCX silver prices fell 0.4 percent week on week and closed at Rs. 59,449/kg on Friday after touching a weekly low of Rs.58,841/kg. Holdings in the iShares Silver Trust, on a weekly basis rose 0.35 percent to 9923.19 tonnes till October 25, 2012 from previous week holdings of 9888.55 tonnes till October 19th 2012.

3201.1

-0.1

-0.2

-7.3

-8.8

59643.0

0.3

-0.4

-5.0

3.1

Source: Reuters

Technical Chart Spot Gold

Outlook
In todays session we expect precious metals to trade with upward bias on the back of mixed global market sentiments amidst speculation that Bank of Japan might announce stimulus measures in tomorrows meeting. However, marginal strength in the DX will cap sharp gains in the gold prices. In the domestic market depreciation in the Indian rupee is expected to support an upside in the precious metals on MCX. Technical Outlook
Unit Spot Gold MCX Gold Dec12 Spot Silver MCX Silver Dec12 $/oz Rs/10 gms $/oz Rs/kg valid for October 29, 2012 Support 1709/1700 30991/30886 31.94/31.63 59550/59040 Resistance
Source: Telequote

1719/1728 31130/31234 32.41/32.77 60155/60680

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Commodities Daily Report

Monday| October 29, 2012

International Commodities
Energy Crude Oil
Nymex crude oil prices declined around 4.2 percent in the last week on the back of rise in the US crude oil inventories and weak demand from the consuming nations. Additionally, strength in the DX also added downside pressure on the crude oil prices. However, sharp downside in the prices was cushioned on the back of Tropical Storm Sandy expected to hit East Coast of US on Tuesday (October 30, 2012). Crude oil prices touched a weekly low of $84.94/bbl and closed at $86.28/bbl on Friday. On the domestic bourses, prices declined 3.9 percent and closed at Rs.4,669/bbl after touching a low of Rs.4,610/bbl in last week. 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
85.8 109.7

as on 26 October, 2012 WoW

-4.6 -2.7

Prev. day
0.3 1.2

MoM
-6.9 -1.9

YoY
-8.7 -3.1

$/bbl

86.3

0.3

-4.2

-6.4

-8.2

$/bbl

109.6

1.0

-0.5

-2.5

-2.3

Rs/bbl

4658.0

0.5

-3.9

-4.8

1.4

Source: Reuters

Market Highlights - Natural Gas

(% change)

as on 26 October, 2012

Natural Gas
On a weekly basis, Nymex natural gas prices declined by more than 5 percent on account of more than expected rise in US natural gas inventories along with strength in the DX. However, sharp downside in the prices was cushioned as a result of expectations of cooler winter weather ahead. Natural gas prices touched a low of $3.355/mmbtu in the last week and closed at $3.394/mmbtu in the last trading session of the week. On the MCX, November crude oil contract declined by 7 percent and closed at Rs.181.90/mmbtu on Friday after touching a low of Rs.179.60/mmbtu during the week. Outlook In the intra-day, we expect crude oil prices to trade on a positive note on the back of better than expected GDP figures indicating demand to increase gradually and expectation of supply disruptions in the East Coast. However, sharp rise in the prices is expected to be capped on the back of sufficient US crude oil inventories. Marginal strength in the DX is expected to cap sharp gains. In the domestic markets crude oil prices are expected to find support and strengthen on the back of depreciation in the Indian rupee. Technical Outlook
Unit valid for October 29, 2012 Natural Gas (NG) Nymex NG MCX NG (Nov 12) Unit $/mmbtu Rs/ mmbtu Last
3.394 181.9

Prev. day
-0.88 -1.36

WoW
-5.17 -7.29

MoM
12.27 5.69

YoY
-5.27 -4.76

Source: Reuters

Technical Chart Nymex Crude Oil

Source: Telequote

Technical Chart Nymex Natural Gas

Support

Resistance

NYMEX Crude Oil

$/bbl

85.70/85.20

86.80/87.30

MCX Crude Nov 12

Rs/bbl

4654/4630

4695/4740

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Commodities Daily Report

Monday| October 29, 2012

International Commodities
Base Metals
Entire base metals pack traded on a weak note due to uncertainty of Spain bailout and slow down in the Euro zone economy. Additionally, strength in the DX also exerted downside pressure on the base metals pack. However, a bounce back was witnessed on Friday on the back of favourable data from the US economy. Decline in LME inventories also cushioned sharp fall base metal prices in the last week. Market Highlights - Base Metals (% change)
Unit LME Copper (3 month) MCX Copper (Nov12) LME Aluminum (3 month) MCX Aluminum Rs /kg
102.6 -0.4 -3.1 -7.1 -6.6

as on 26 October, 2012 WoW

-2.1

Last
7822.8

Prev. day
0.0

MoM
-4.8

YoY
-4.5

$/tonne

Rs/kg

425.0

0.3

-2.4

-3.5

5.7

$/tonne

1924.8

-0.7

-2.3

-8.6

-14.8

Copper
Copper, the leader of the base metals complex fell 2.12 percent on the back of rise in the risk aversion amongst market participants amidst worries over possible sharp tightening in the Federal budget as Fiscal cliff is nearing to an end. This is being reflected in the slowdown in the US business investment. This created bearish market sentiments. Strength in the DX also acted as bearish factor for the copper prices. Decline in LME Copper inventories by 1.2 percent however, cushioned sharp fall in the Copper prices week on week. LME Copper stocks stood at 2,19,800 tonnes. The red metal touched a weekly low $7,756.25/tonne and closed at $7,822/tonne on Friday. On the domestic front, prices declined 2.4 percent and closed at Rs.426.00/kg after touching a weekly low of Rs.421.30 /kg due to appreciation in the Indian rupee. Outlook From the intraday perspective base metal prices are expected to trade on a positive note due to mixed global market sentiments. Positive data from US economy may increase the demand for the red metal. However, marginal gains in the DX are expected to cap sharp gains in the base metals pack. Depreciation in the Rupee will act as a supportive factor for the base metal 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 29, 2012 Support 424.20/422 96.60/96 109.30/108.60 102.55/101.55 856/848.50 Resistance 427.70/429.30 98/99 110.80/111.80 103.40/104.10

(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

16050.0

-0.8

-5.2

-12.8

-19.3

Rs /kg

863.5

-0.6

-5.5

-11.6

-11.4

$/tonne

2023.3

0.6

-4.3

-10.9

-0.8

Rs /kg

109.4

0.9

-4.0

-9.7

10.5

$/tonne

1834.5

-0.5

-2.5

-12.6

-5.9

Rs /kg

97.2

-0.2

-2.9

-11.5

3.0

LME Inventories
Unit Copper Aluminum Nickel Zinc Lead tonnes tonnes tonnes tonnes tonnes 26 October
219,800 5,052,625 129,012 1,146,375 306,850
th

25 October
218,700 5,058,625 128,718 1,145,925 309,875

th

Actual Change
1,100 -6,000 294 450 -3,025

(%) Change
0.5 -0.1 0.2 0.0 -1.0 Source: Reuters

Technical Chart MCX Copper

Source: Telequote

873/883

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Commodities Daily Report

Monday| October 29, 2012

International Commodities
Important Events for Today

Indicator Retail Sales y/y German Prelim CPI m/m Nationwide HPI m/m Inflation Report Hearings Net Lending to Individuals m/m Italian 10-y Bond Auction Core PCE Price Index m/m Personal Spending m/m

Country Japan Euro UK UK UK Euro US US

Time (IST) 5:20am All Day 29 31

th st

Actual 0.4% -

Forecast 1.3% 0.0% 0.6B 0.1% 0.6%

Previous 1.8% 0.0% -0.4% -0.4B 0.1% 0.5%

Impact Medium Medium Medium High Medium High Medium Medium

Tentative 3:00pm Tentative 6:00pm 6:00pm

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