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Weekly MCX Newsletter
29th APRIL TO 4h MAY’2013
Weekly MCX Report 22nd to 27th April’2013
The primary dealers of bullion in India struggled to keep pace with robust demand quoting higher premiums, even as prices recovered partially from their lowest level in more than 18 months. India, the biggest buyer of gold, has been trying to limit imports to keep a lid on record current account deficit, and the economic advisory council expects the country to import USD 45 billion tonnes of the yellow metal in the year to March 2014.
Gold prices in the global market extended Thursday's gains on Friday after a significant rise in physical demand. Spot gold prices rose to US$1,474.55 per ounce as of 10.28 AM IST on Friday. Gold futures for June delivery on Globex platform of Comex was seen trading slightly up by 0.87% at $1474.45 per troy ounce as on Friday. Gold futures on India's Multi Commodity Exchange (MCX) for June delivery was also up by 0.51% at Rs.27180 per 10 grams as on Friday. US GDP data is out for the day at 7.00 PM IST evening and traders may get trading clues from the data released. Also, US jobless claims data that was released yesterday portray a better economic outlook as the figures have declined by 16,000 to a seasonally adjusted 339,000 in the week ended April 20. On April 23 the US Mint stated that it suspended sales of smallest gold coins after a significant surge in demand. Significant surge in physical demand for gold around the world, especially from Asia has been supporting gold prices in the global market after the recent bear rally in metal complex. Hindus in India are about to celebrate Akshaya Tritiya festival on May 13 which is widely believed to be an auspicious day to buy precious metals. Ongoing wedding season demand in India is also supporting bullion prices. “Nationwide daily sales of jewellery, coins and bars may be about 4 metric tons, compared with normal levels of about 2 tons to 2.5 tons,” Rajesh Mehta, chairman of Rajesh Exports Ltd. (RJEX), said to Bloomberg. Central banks may take benefit of fall in gold prices, according to the London-based World Gold Council.
Comex Copper slightly up capped by low China manufacturing data. MCX Copper trades negative as China PMI data subdued While the government has signaled some manoeuvring room, uncertainty surrounding bauxite supply will likely persist. The more volatile alumina imports fell by 55% y/y to 195Kt in March (down 45% m/m), but total Q1 imports of 1Mt were only 11% lower than last year.
European secondary aluminum ingot prices stayed flat on Friday April 26, with some producers looking to sell into the UK for the first time, as continental prices offered no margin against high scrap prices. Shanghai Futures Exchange copper price was up on Friday April 26 as shorts closed positions ahead of the upcoming holidays in China. London Metal Exchange copper price touched a nine-day high during morning Asian trading on Friday April 26 as traders squared positions ahead of holidays in China and expectations of a rate cut by the European Central Bank. Metals including cobalt, nickel and rhenium account for about 25% of the overall cost of an F135 jet engine, Pratt & Whitney’s vp of the F135 project told delegates at the Minor Metals Trade Assn annual conference in Washington. The range for Chinese spot nickel premiums was unchanged this week even as offers for seaborne material bought with letters of credit went up. Sequential weakness in Chinese domestic concentrate and refined production, as well as lower concentrate imports (and a pick-up in some semi-fabricated lead exports), versus a solid pick-up in battery and e-bike production, have lead to a balanced refined market in 2013 so far. LME cash prices have subsequently fallen below $16,000/t in mid-April for only the second period since mid-2009. The fact that LME stocks have continued to rise despite the strong growth in Chinese imports, demonstrates, according to Barclays view, the weakness in stainless demand ex-China, particularly in Europe, with little supply chain restock of note emerging so far this year. “With contract TCs settled 10% higher and physical premiums also likely to be higher, we believe there will be a bigger incentive for smelters to process concentrate so we expect the surplus to form both in metal and concentrate,” noted Barclays.
Brent crude oil futures on the Globex platform of NYMEX is trading above $100 per barrel on Wednesday, while a less than expected fall in US crude oil stock-piles has lifted WTI crude oil futures to some extent. US Energy Information Administration (EIA) is scheduled to release its crude oil stock-piles data at 14.30 GMT (08.00 PM IST) today and crude oil traders may get trading clues from the data.
US natural gas prices may average $3.90 per MMBtu in 2013 and $4.10 per MMBtu in 2014, stated London based Barclays in its recent market analysis. Coal-to-gas displacement remains the balancing item for natural gas markets. Gas demand for power during this injection season should pull back about 1 Bcf/d with a return to normal weather and changes in nuclear and renewable generation, excluding coal-to-gas displacement. Barclays analysis of all other supply and demand variables, excluding gas use in power generation, suggests that balances will tighten 1.9 Bcf/d during the injection season. In contrast, inventories will need to grow on average 4.0 Bcf/d faster than last year to rebuild to 3.9 Tcf by the end of October. This means that a 5.0 Bcf/d drop in coal-to-gas displacement compared with last year will be needed to rebalance the market. This dynamic is not transparent, and the exact relationship between prices and coal displacement is elusive. Each of the years that have featured coal-to-gas displacement in the past has had its unique circumstances, and 2012 was hardly normal in that respect. As well, the variation in coal-to-gas displacement is lower at higher gas price levels: it varied from 2.7 Bcf/d to 6.6 Bcf/d when gas prices were $3.00-3.50 per MMBtu, a similar $0.50 per MMBtu trading range. This year, coal prices have pulled back from 2012 levels. Barclays equity research team’s estimates1 for 2013 realized contract coal prices by the top four US coal producers point to a 7.3% drop of contract coal prices versus those of 2012. This means that all else equal, gas prices would have to average lower than last year to displace the same amount of coal. On the other hand, coal plants are more likely to dispatch on fuel economics this year than last, when near-record coal inventories at power plants forced many coal-fired units to dispatch at a loss. In conversations with utilities, they have pointed out that coal inventories in the electric power sector are likely not as high today as last year at this time. Several have also noted that they have contracted lower volumes than last year, as a percent of expected coal demand. This means that they will have more flexibility in dispatching generation as fuel economics command, possibly more so than in any other prior year.
a key determinant in the direction of prices in the near term.
GOLD (5 JUNE):
TREND : - CONSOLIDATE
RESISTANCE : - 27500, 28200 SUPPORT STRATEGY : - 26100, 25270 : - SELL ON HIGH
SILVER (4 MAY):
TREND : - CONSOLIDATE
RESISTANCE : - 46900, 48500 SUPPORT STRATEGY : - 43900, 42300 : - SELL ON HIGH
CRUDEOIL (20 MAY):
TREND RESISTANC SUPPORT STRATEGY : - BULLISH : - 5250, 5350 : - 4800, 4660 : - BUY ON DIPS
COPPER (28 JUNE)
TREND RESISTANC SUPPORT STRATEGY : - CONSOLIDATE : - 396,400 : - 378, 368 : - SELL ON HIGH
GOLD SILVER COPPER CRUDE OIL NATURAL GAS PALLADIUM PLATINUM
1457.26 23.84 3.1690 92.91 4.230 678.50 1475.75
USDINR EURUSD USDJPY USDCHF GBPUSD USDCAD
54.4200 1.3027 98.2200 00.9428 01.5487 01.0169
SCRIPT GOLD SILVER CRUDEOIL COPPER LEAD ZINC ALIMINUM NICKEL NATURAL GAS
R3 29115 49920 5504 408 117.55 108.65 108.00 868.60 249
R2 28280 47870 5300 401 115.15 106.80 106.60 857.30 242
R1 27730 46440 5185 386 113 104.70 104.40 844.80 236
P 26895 44390 4980 380 110.60 102.85 103.00 833.50 230
S1 26345 42955 4866 365 108.45 100.75 100.80 821.00 224
S2 25510 40905 4661 358 106.05 98.90 99.40 809.70 216
S3 24960 39475 4547 344 103.90 96.80 97.20 797.20 211
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