Commodities Daily Report

Monday| September 3, 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| September 3, 2012

International Commodities
Overview
US Markets closed today on the eve of Labor Day. European Unemployment Rate increased to 11.3 percent in July. US Revised Consumer Sentiment increased to 74.3-level in last month. Indias GDP increased by 5.5 percent in Q2 2012. LME Copper inventories declined by 2.4 percent for w/e 31 August.
st

Market Highlights (% change)

Last INR/$ (Spot) 55.52 Prev day 0.2

as on 31 August, 2012

w-o-w -0.1

m-o-m 0.4

y-o-y -17.8

Asian markets are trading on a range bound with bearish tone after eyeing weak manufacturing data from the Chinese economy overshadowing speculation that the US will adopt stimulus measures. Chicago Purchasing Managers' Index (PMI) declined by 0.7 points to 53mark in August as against a rise of 53.7-level in July. US Revised University of Michigan (UoM) Consumer Sentiment increased by 0.7 points to 74.3-level in last month from previous rise of 73.6-mark a month ago. Revised UoM Inflation Expectations remained unchanged at 3.6 percent in the month of August. Factory Orders rose by 2.8 percent in July as compared to previous decline of 0.5 percent in previous month. Indias Gross Domestic Product (GDP) increased by 5.5 percent in Q2 of 2012 from previous rise of 5.3 percent in earlier quarter. Farm output increased around 2.9 percent in last quarter as against a rise of 1.7 percent in previous quarter. Manufacturing output increased by 0.2 percent and construction rose by 10.9 percent during the same period. The US Dollar Index (DX) swung between gains and losses and finally declined 0.5 percent week on week due to optimism that Federal Reserve Chairman might announce stimulus measures to foster growth in the economy. This led to rise in the risk aversion amongst market participants and thereby decline in the demand for the low yielding currency that is US Dollar Index (DX). US equities witnessed mixed trend throughout the week on varied views that whether Fed would adopt stimulus measures or not. But, finally the Fed Chairman Ben Bernanke said that they do not rules out for further monetary easing. The currency touched a weekly low of 80.96 and closed at 81.22 on Friday. The Indian Rupee swung between gains and losses in the last week. The currency traded on a flat note and depreciated marginally by 0.1 percent in the last week. The Indian Rupee depreciated taking cues from month end dollar demand from oil and its importers. However, sharp downside in the currency was cushioned as a result of increase in FII inflows during the week. It touched a low of 55.88 in the last week and closed at 55.52 on Friday. For the current month, FII inflows totaled at Rs 10,803.90 crores till 31st August 2012. While year to date basis, net capital inflows stood at Rs 63,069.70 crores till 31st August 2012. Japans Capital Spending increased by 7.7 percent in Q2 of 2012 as against a rise of 3.3 percent in Q1 of 2012.

$/Euro (Spot)

1.2575

0.6

0.5

1.5

-11.8

Dollar Index

81.22

-0.6

-0.5

-1.5

8.9

NIFTY

5258.5

-1.1

-2.4

0.8

5.1

SENSEX

17380.8

-0.9

-2.3

1.1

4.2

DJIA

13090.8

0.7

-0.5

0.0

13.9

S&P

1406.6

0.5

-0.3

2.0

15.4

Source: Reuters

The Euro appreciated by 0.5 percent during the week taking cues from positive economic data from the country. Additionally, weakness in the DX also supported upside in the currency. It touched a high of 1.2636 in the last week and closed at 1.2575 in the last trading session of the week. German Retail Sales declined by 0.9 percent in July as against a rise of 0.5 percent in June. Italian Monthly Unemployment Rate remained unchanged at 10.7 percent in July. Italian Quarterly Unemployment Rate increased to 10.6 percent in Q2of 2012 from previous rise of 10.1 percent in Q1 of 2012. Consumer Price Index (CPI) Flash Estimate increased by 2.6 percent in August as compared to previous rise of 2.4 percent in prior month. European Unemployment Rate increased to 11.3 percent in July with respect to rise of 11.2 percent a month earlier. Italian Prelim CPI increased by 0.4 percent in current month when compared to earlier rise of 0.1 percent in July. Chinas Manufacturing Purchasing Managers' Index (PMI) declined by 0.9 points to 49.2-mark in August with respect to rise of 50.1-level in July. Non-Manufacturing PMI increased by 0.7 points to 56.3-mark in August as against a previous level of 55.6 in July. HSBC Final Manufacturing PMI increased at slow pace of 47.6-level in last month from earlier mark of 47.8 in July. www.angelcommodities.com

Commodities Daily Report

Monday| September 3, 2012

International Commodities
Bullion Gold
Spot gold prices increased around 1.2 percent in the last week on the back of weakness in the US Dollar Index (DX). Also, statement from Fed Chairman Ben Bernanke that he wont rule out for stimulus measures to boost the economy acted as a supportive factor for the prices. However, further upside in the prices was capped as a result of rise in risk aversion in the global markets. The yellow metal touched a high of $1,692.71/oz in the last week and closed at $1,690.54/oz in the last trading session of the week. On the MCX, Gold October contract increased by more than 1 percent on account of depreciation in the Indian Rupee and closed at Rs.31,220/10 gms on Friday after touching a high of Rs.31,231/10 gms in the last week. Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, increased by 0.2 percent and stood at 1289.52 tonnes till August 31, 2012 as against 1286.50 tonnes for the week ending on August 24, 2012. Market Highlights - Gold (% change)
Gold Gold (Spot) Gold (Spot Mumbai) Gold (LBMAPM Fix) Comex (Dec12) MCX (Oct12) Unit $/oz Rs/10 gms $/oz $/oz Rs /10 gms Last 1690.5 30700.0 Prev day 2.1 0.0 as on 31 August, 2012 WoW 1.2 -0.3 MoM 5.4 3.3 YoY -7.3 13.2

1648.5 1684.6 31206.0

-0.7 1.9 1.2

-1.1 0.9 1.1

2.9 4.9 5.2

-9.5 -7.7 14.7

Source: Reuters

Market Highlights - Silver (% change)

Silver Silver (Spot) Silver (Spot -Mumbai) Silver (LBMA) Comex (Sep12) MCX (Sep12) Unit $/oz Rs/1 kg $/oz $/ oz Rs / kg Last 31.7 58190.0 3052.0 3137.0 58404.0 Prev day 4.2 -0.6 -0.5 3.3 2.5

as on 31 August, 2012 WoW 3.0 0.4 0.5 2.5 2.6 MoM 14.1 10.2 12.0 12.9 9.5 YoY -23.5 -8.2 -26.4 -24.4 -6.0

Silver
Taking cues from rise in gold prices along with weakness in the DX, Spot silver prices increased around 3 percent during the last week. However, further upside in the prices was restricted on the back of decline in the base metals group. The white metal touched a high of $31.76/oz during the week and closed at $31.69/oz in the last trading session of the week. In the Indian markets depreciation in the Indian Rupee supported upside in the prices and closed at Rs.58,362/kg on Friday after touching a high of Rs.58,517/kg in the last week. On a weekly basis, holdings in the iShares Silver Trust, declined by 1.0 percent to 9721.33 tonnes on 31st August 2012 from previous level of 9820.81 tonnes on 24th August 2012.

Source: Reuters

Technical Chart Spot Gold

Outlook
In todays session we expect precious metals to trade range bound with bullish tone on the back of mixed global markets along with weakness in the DX. Additionally expectations of stimulus measures from Federal Reserve coupled with speculation that European leader might take steps to solve Euro Zone debt crisis is likely to support an upside in the precious metals.
Source: Telequote

Technical Outlook
Unit Spot Gold MCX Gold Oct12 Spot Silver MCX Silver Sep12 $/oz Rs/10 gms $/oz Rs/kg

valid for September 3, 2012 Support 1677/1660 31098/30877 31.22/30.70 60250/59780 Resistance 1707/1724 31488/31709 32.22/32.75 61266/61750

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Commodities Daily Report

Monday| September 3, 2012

International Commodities
Energy Crude Oil
Nymex crude oil prices gained by 0.3 percent in the last week taking cues from expectations that Tropical Storm Isaac will disrupt the oil fields in Gulf of Mexico coupled with weakness in the DX. Additionally, statement from Fed Chairman Ben Bernanke that he wont rule out for stimulus measures to boost the economy acted as a sportive factor for the prices. However, further upside in the prices was capped as a result of unexpected rise in US crude oil inventories. Crude oil prices touched a high of $97.72/bbl in the last week and closed at $96.47/bbl in the last trading day of the week. On the domestic bourses, prices gained by 0.2 percent and closed at Rs.5,358/bbl on Friday after touching a high of Rs.5,424 during the week. Market Highlights - Crude Oil (% change)
Crude Oil WTI (Spot) Brent (Spot) Nymex Crude (Aug12) ICE Brent Crude (Aug12) MCX Crude (Aug12) Unit $/bbl $/bbl Last 96.5 114.7 Prev. day 2.0 1.5 WoW 0.7 -1.6 as on 31 August, 2012 MoM 5.5 4.0 YoY 8.4 -2.8

$/bbl

96.5

2.0

0.3

5.5

8.5

$/bbl

114.6

1.7

0.9

5.2

0.2

Rs/bbl

5358.0

1.6

0.2

5.7

30.8

Source: Reuters

Market Highlights - Natural Gas

Natural Gas (NG) Nymex NG MCX NG (Aug12) Unit $/mmbtu Rs/ mmbtu Last 2.802 155.5

(% change)

as on 31 August, 2012

Prev. day 1.52 0.97

WoW 3.66 2.37

MoM -13.06 -12.89

YoY -31.00 -16.22

Natural Gas
Nymex natural gas prices gained around 3.6 percent on the back of weakness in the DX. However, further upside in the prices was capped as a result of more than expected increase in US crude oil inventories. Gas prices touched a high of $2.808/mmbtu during the week and closed at $2.802/mmbtu in the last trading session of the week. On the domestic basis, prices increased by 2.3 percent and closed at Rs.155.5/mmbtu on Friday after touching a high of Rs.156.3/mmbtu in the last week. Outlook We expect crude oil prices to trade with bearish tone taking cues from mixed global market sentiments along with decline in Chinas manufacturing PMI. Additionally, operations in the refineries have resumed in the Gulf of Mexico after the Hurricane Isaac passed over from region adding further downside pressure to the crude oil prices. However, weakness in the DX will cushion sharp fall in the prices. In the Indian markets appreciation in the Rupee will lead to further downside pressure on the crude prices. Technical Outlook
Unit valid for September 3, 2012 Support Resistance

Source: Reuters

Technical Chart Nymex Crude Oil

Source: Telequote

Technical Chart Nymex Natural Gas

NYMEX Crude Oil

$/bbl

96.0/95.0

97.50/98.40

MCX Crude Aug12

Rs/bbl

5335/5300

5418/5449

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Commodities Daily Report

Monday| September 3, 2012

International Commodities
Base Metals
The base metals pack traded on negative note in the last week on the back of rise in risk aversion in the global markets tracking weak economic data from the Asian economies particularly Japan, China and South Korea. However, sharp downside in the prices was cushioned on account of decline in LME inventories apart from Nickel coupled with weakness in the DX. In the Indian markets depreciation in the Rupee cushioned sharp fall in the prices. Copper Copper, the leader of the base metals complex declined by 0.9 percent during the week on the back of weak global market sentiments coupled with rise in Shanghai inventories. However, sharp fall in the prices was restricted taking cues from sharp decline in LME copper inventories by 2.4 percent which stood at 229,900 tonnes along with weakness in the DX. The red metal touched a low of $7,498/tonne during the week and closed at $7,592.0/tonne in the last trading session. On the domestic front, prices gained by 0.1 percent due to depreciation in the Indian rupee and closed at Rs.426.25/kg after touching a high of Rs.424.40/kg in the last week. Weekly Copper Inventories The red metals inventories on the LME warehouses declined around 2.4 percent to 229,900 tonnes on 31st August 2012 from the previous level of 235,550 tonnes on 24th August 2012. Weekly copper inventories at warehouses monitored by the Shanghai Futures Exchange increased by 0.5 percent to 158,065 tonnes last week. Outlook Technical Chart LME Copper From the intra-day perspective, we expect base metal prices to trade sideways note on account of mixed global market sentiments along with weakness in the DX. While on the other hand, decline in Chinas manufacturing PMI will add downside pressure on the prices. In the Indian markets appreciation in the Rupee will lead to fall in the base metals prices on the MCX. Technical Outlook
Unit MCX Copper Aug12 MCX Zinc Aug12 MCX Lead Aug12 MCX Aluminum Aug12 MCX Nickel Aug12 Rs /kg Rs /kg Rs /kg Rs /kg Rs /kg valid for September 3, 2012 Support 423.50/420.60 101.80/101.10 108.55/107.85 104.40/103.70 886.20/878.60 Resistance 428.65/431.0 102.75/103.50 109.50/110.15 105.50/106.10 902.70/911.50
Source: Telequote

Market Highlights - Base Metals (% change)

Unit LME Copper (3 month) MCX Copper (Aug12) LME Aluminum (3 month) MCX Aluminum (Aug12) LME Nickel (3 month) MCX Nickel (Aug12) LME Lead (3 month) MCX Lead (Aug12) LME Zinc (3 month) MCX Zinc (Aug12) Rs /kg 100.6 $/tonne 1840.0 Rs /kg 109.4 $/tonne 1964.0 Rs /kg 887.0 $/tonne 16050.0 Rs /kg 102.8 $/tonne 1892.3 Rs/kg 424.3 $/tonne Last 7592.0

as on 31 August, 2012 WoW -0.9 MoM 2.2 YoY -17.0

Prev. day 0.3

0.3

-0.3

2.6

0.4

0.7

-1.4

1.8

-22.8

-0.7

-1.9

-0.1

-8.0

0.2

-2.7

2.9

-26.3

-0.5

-2.6

1.5

-11.5

0.8

-0.4

3.9

-22.6

0.7

0.6

3.9

-6.5

0.1

-1.8

0.0

-17.7

-0.6

-2.2

-1.8

-1.8

Source: Reuters

LME Inventories
Unit Copper Aluminum Nickel Zinc Lead tonnes tonnes tonnes tonnes tonnes 31 August 229,900 4,870,050 118,908 951,100 310,225
st

30 August 230,175 4,878,950 118,662 953,650 311,475

th

Actual Change -275 -8,900 246 -2,550 -1,250

(%) Change -0.1 -0.2 0.2 -0.3 -0.4

Source: Reuters

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Commodities Daily Report

Monday| September 3, 2012

International Commodities
Important Events for Today

Indicator Capital Spending q/y HSBC Final Manufacturing PMI Spanish Manufacturing PMI Italian Manufacturing PMI Manufacturing PMI Bank Holiday ECB President Draghi Speaks

Country Japan China Euro Euro UK US Euro

Time (IST) 5:20am 8:00am 12:45pm 1:15pm 2:00pm All Day 7:00pm

Actual 7.7% 47.6 -

Forecast 8.7% 45.0 46.2 -

Previous 3.3% 47.8 42.3 44.3 45.4 -

Impact Medium Medium Medium Medium High High

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