Commodities Daily Report
Monday, May 16, 2016
International Commodities
Content
Overview
Precious Metals
Energy
Base Metals
Important Events for today
Research Team
Prathamesh Mallya
Sr. Research Analyst (Non-Agro Commodities & Currency)
prathamesh.mallya@angelbroking.com
(022) 2921 2000 Extn :6134
Kaynat Chainwala
Research Analyst
kaynat.chainwala@angelbroking.com
(022) 2921 2000 Extn :6136
Angel Commodities Broking Pvt. Ltd.
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Commodities Daily Report
Monday, May 16, 2016
International Commodities
Overview
 US Retail Sales surged by 1.3 percent in Apr’16
 Euro-zone’s Flash GDP for q/e Mar’16 plunged by 0.5 percent
 China’s Industrial Production plunged to 6 percent in Apr’16
Asian markets are trading mixed owing to less cheering economic data
release from China over the weekend. Moreover, recent statement by
the Japanese FM to intervene in the currency market if strength in yen
persisted for long led to volatile trading in the global markets.
The Dollar Index traded higher by 0.5 percent in the last week as markets
discounted the statement made by Charles Evans, president of the
Chicago Fed. He said that America’s economic fundamentals were solid
and growth this year should pick up to around 2.5 percent. However,
there are some weak spots in capital spending hence continuation of
wait and watch policy with respect to US interest rates would be
appropriate.
He also said that a temporary overshoot in inflation so as to lift consumer
price growth up to the Fed's longer-term target of 2 percent and raise
overall inflation expectations from current low levels is welcome. All the
above statements acted as a positive factor for the greenback.
US Dollar Index made a weekly high of 94.85 and closed at 94.59 on
Friday.
The Indian Rupee depreciated by 0.2 percent in the last week led by
outflows of funds in the domestic market amid negative sentiments in
the global markets. Moreover, fresh buying of the American currency by
importers and banks amid stronger dollar in the overseas market
dragged the rupee further lower.
Domestic markets i.e. Sensex and Nifty ended on a positive note after
Rajya Sabha passed a new bankruptcy code to address corporate debts
and improve the ease of doing business. Moreover, recently released UN
report stated that despite delay in domestic policy reforms, India’s
economy has been gaining momentum slowly and is projected to grow
by 7.3 per cent in 2016.
News & developments
Oil price to be dragged down by more Saudi pumping
The oil price remaining "lower for longer" is now "highly likely",
says CNBC, after Saudi Arabia ramped up its reform agenda.
Market Highlights (% change)
Last
Prev day
as on May 13, 2016
w-o-w
m-o-m
y-o-y
INR/$
(Spot)
66.8
-0.15
-0.4
-0.4
-5.2
$/Euro
(Spot)
1.1
-0.62
-0.9
0.3
-0.9
Dollar
Index
94.6
0.5
0.8
-0.1
19.1
NIFTY*
7814.9
-1.08
1.1
#N/A
-3.8
SENSEX*
25489.6
-1.17
1.0
#N/A
39.4
DJIA
17535.3
-1.05
-1.2
-2.6
-4.0
2046.6
-0.8
-2.7
-0.6
-2.9
S&P
Source: Reuters
Chinese Indicators Lag behind Expectations, Show Economy
Struggles
Industrial output rose 6.0% year-over-year in April, compared
with 6.8% growth in March, the National Bureau of Statistics
said Saturday. This was below a median forecast of 6.6%
growth by 15 economists surveyed by The Wall Street Journal.
Fixed-asset investment in urban areas grew by a weaker-thanexpected 10.5% year-over-year in the January-to-April period,
compared with an annual increase of 10.7% for the first three
months of 2016.
Retail sales—a traditional bright spot—grew by a less-thanexpected 10.1% in April compared with a year earlier, slowing
from March’s 10.5% year-over-year rise, the statistics bureau
said. (WSJ)
The kingdom has replaced its veteran oil minister, Ali al-Naimi, with
Khalid al-Falih, the chairman of state-owned oil company Saudi Aramco,
who is close to reforming Crown Prince Mohammad bin Salman and has
already indicated the kingdom will continue to prioritise market share
over prices.
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Commodities Daily Report
Monday, May 16, 2016
International Commodities
Bullion
Gold
Last week spot gold prices declined by 1.2 percent to close at $1273.2 per
ounce. ounce on account of strengthening dollar and profit booking after a
recent rally. The yen fell to a two-week low against the dollar on
speculation that the Bank of Japan could expand its monetary stimulus as
soon as next month, helping to lift the dollar index.
Surging inflows into gold-backed ETFs drove global gold demand to its
highest first-quarter total on record this year at 1,290 tonnes, the World
Gold Council (WGC) said, despite a near 20 percent drop in jewelry
demand.
Gold reached a 15-month high of $1,303.60 last week, before surrendering
to the broad strength of the dollar. Goldman increased its gold price
forecasts for coming months, citing stronger net speculative positioning.
Market Highlights - Gold (% change)
as on May 13, 2016
Prev.
day
Gold
Unit
Last
Gold
(Spot)
$/oz
1273.2
Gold (Spot
-Mumbai)
Rs/10
gms
Comex
Gold
MCX Gold
(Jun’16)
WoW
MoM
YoY
0.80
-1.2
3.8
4.3
29925.0
0.42
-0.3
#N/A
9.6
$/oz
1280.0
0.64
1.1
2.2
4.5
Rs /10
gms
30034.0
0.44
-1.1
4.4
9.5
Source: Reuters
Market Highlights - Silver (% change)
On the MCX, gold prices declined by 1.1 percent to close at Rs.30034 per
10 gms last week.
Silver
Silver
Silver
(Spot)
Last week spot silver prices declined by 2.1 percent to close at $17.1 per
barrel. The fall in silver prices is in line with declined in gold prices and fall
in the base metals complex.
ON the MCX, silver prices declined by 1.8 percent to close at Rs.40974 per
kg.
Unit
as on May 13, 2016
Last
Prev day
WoW
MoM
YoY
$/oz
17.1
0.8
-2.1
5.8
-2.0
Silver
(Spot Mumbai)
Comex
Silver
Rs/1
kg
41000.0
-2.1
-1.0
#N/A
3.0
$/ oz
17.1
-1.2
-2.4
5.2
-2.1
MCX Silver
(May’16)
Rs / kg
40974.0
0.42
-1.8
7.0
3.1
Source: Reuters
Technical Chart – Spot Gold
Outlook
On an intraday basis, we expect gold prices to trade higher as international
markets are trading higher by around 0.24 percent. While strengthening
dollar index and profit booking at higher levels will cap the rally. Strong
inflows in to the gold backed ETF’s indicate that investor interest in the
yellow metal remains intact which will act as a positive factor for gold
prices.
On the MCX, gold prices are expected to trade higher today.
Technical Outlook
valid for May 16, 2016
Unit
Support
Resistance
$/oz
1271/1265
1282/1288
29900/29750
30150/30300
27290/27150
27520/27650
$/oz
17.10/16.90
17.40/17.60
Rs/kg
40500/40100
41300/41700
36745/36340
37545/37945
Source: Reuters
Spot Gold
MCX Gold Jun’16
Rs/10 gms
NCDEX Gold hedge May’16
Spot Silver
MCX Silver May’16
NCDEX Silver hedge June’16
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37
Commodities Daily Report
Monday, May 16, 2016
International Commodities
Energy
Crude Oil
Market Highlights - Crude Oil (% change)
Unit
Last
Prev.
day
WoW
MoM
YoY
Brent
(Spot)
$/bbl
47.1
1.4
6.3
10.4
-27.9
Nymex
Crude
(May’16)
ICE Brent
Crude
(May’16)
$/bbl
46.2
-1.0
3.5
11.3
-22.8
$/bbl
47.8
-0.5
5.4
9.1
-28.2
Rs/bbl
3158.0
-0.1
4.0
9.5
-18.3
Crude Oil
WTI oil prices rose by 6.3 percent last week to close at $46.2 per barrel
U.S. crude hitting six-month highs as investors weighed a forecast for
tighter global supplies against signs of another storage build at the hub
for U.S. crude futures. Worries of a major outage in Nigerian crude also
boosted the market.
Nigeria is Africa's largest oil producer and (Qua Iboe) the largest crude
grade, set to account for 317,000 bpd of exports in June. It was not
immediately clear by how much of the output was reduced by the
pipeline problem.
as on May 13, 2016
MCX Crude
(May’16)
Source: Reuters
Market Highlights - Natural Gas (% change)
The U.S. government unexpectedly said crude inventories fell the first
time since March, adding to concerns over supply outages in Canada
and Nigeria.
The U.S. Energy Information Administration (EIA) said crude inventories
fell 3.4 million barrels last week, compared with analysts' expectations
for an increase of 714,000 barrels and the American Petroleum
Institute's (API) build of 3.5 million barrels in preliminary data.
Natural
Gas (NG)
Nymex
NG
MCX NG
(May’16)
as on May 13, 2016
Unit
Last
Prev. day
WoW
MoM
YoY
$/mmbtu
2.23
-1.37
0.22
8.78
-26.98
Rs/
mmbtu
141.4
-1.74
1.07
6.80
-25.81
Source: Reuters
Technical Chart – NYMEX Crude Oil
On the MCX, oil prices rose by 4 percent to close at Rs.3158 per barrel.
Outlook
We expect oil prices to trade higher continuing its positive momentum
from the previous trading session. Besides, worries of outage in Nigeria,
one of the largest exporter in the African nation will also act as a
positive factor for oil prices.
On the MCX, oil prices are expected to trade higher today.
Technical Outlook
valid for May 16, 2016
Unit
Support
Resistance
$/bbl
45.90/45.30
47.50/48.20
MCX Crude May’16
Rs/bbl
3040/3000
3140/3190
NCDEX Crude May’16
Rs/bbl
3200/3160
3300/3350
NYMEX Crude Oil
Technical Chart – NYMEX Natural Gas
Source: Reuters
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Commodities Daily Report
Monday, May 16, 2016
International Commodities
Base Metals
Market Highlights - Base Metals (% change)
Base metals on the LME apart from Zinc traded lower last week as
various Federal Reserve Bank members called a June interest-rate
called a possibility.
Later in the week, Boston Federal Reserve President Eric Rosengren
said the Fed should raise interest rates if data confirms a stronger jobs
market and inflation outlook in the second quarter.
Unit
LME Copper (3
Last
Prev. day
as on May 13, 2016
MoM
YoY
-3.8
-22.6
-27.7
0.5
-3.2
-17.5
-24.7
1537.5
-0.7
-3.8
-13.7
-17.7
Rs /kg
103.0
-0.2
-3.2
-7.4
-12.0
$/tonne
8640.0
0.3
-4.3
-33.5
-37.5
Rs /kg
580.9
0.5
-3.9
-28.1
-33.7
$/tonne
1711.0
-0.1
-1.8
-8.9
-13.0
Rs /kg
115.7
0.3
-1.3
-1.6
-7.8
$/tonne
1896.0
1.1
0.7
-11.0
-17.7
Rs /kg
126.5
1.3
0.8
-4.5
-13.7
$/tonne
4627.5
0.3
Rs/kg
309.9
$/tonne
WoW
month)
MCX Copper
(May’16)
LME Aluminum
(3 month)
On the MCX, base metals except Zinc traded lower last week in line
with international trends.
MCX Aluminum
Copper
LME Nickel
(May’16)
(3 month)
LME Copper prices plunged 3.8 percent to close at $4627.5 per tonne
as dollar gained momentum after Taro Aso, Japan’s finance minister,
said it would be “natural” for the government to intervene in the
markets if the yen keeps logging “one-sided” gains.
However, sharp losses were cushioned as BOJ Governor Haruhiko
Kuroda said on Thursday that the Bank of Japan is likely to expand
monetary stimulus either in June or July. Also, producers from Codelco
to Glencore Plc gave optimistic longer term outlooks at an industry
conference in Miami as three years of declining prices deters
production.
MCX copper prices fell by 3.2 percent last week to close at Rs.309.9
per kg.
Outlook
MCX Nickel
(May’16)
LME Lead
(3 month)
MCX Lead
(May’16)
LME Zinc
(3 month)
MCX Zinc
(May’16)
Source: Reuters
LME Inventories in tonnes
6th May
Copper
We expect LME Copper prices to trade lower as China’s industrialproduction and investment data came in below expectations in April,
despite string of easing measures. Also, markets will now await FOMC
Meeting Minutes due to be released on Wednesday.
We expect MCX Copper prices to trade lower today.
Technical Outlook
Support
Resistance
MCX Copper June’16
Rs /kg
307/305
311/314
MCX Zinc May’16
Rs /kg
125.50/124.50
127.50/128.50
MCX Lead May’16
Rs /kg
114/113
116/117
MCX Aluminum May’16
Rs /kg
102/101
104/105
MCX Nickel May’16
Rs /kg
573/565
588/595
Actual
Change
(%)
Change
156675
160000
-3325
-2.08%
2584400
2589225
-4825
-0.19%
Nickel
412344
414018
-1674
-0.40%
Zinc
390375
391500
-1125
-0.29%
Lead
176075
176050
25
0.01%
Aluminum
valid for May 16, 2016
Unit
5th May
Source: Reuters
Technical Chart – LME Copper
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Commodities Daily Report
Monday, May 16, 2016
International Commodities
Economic indicators to be released on May 16, 2016
Indicator
Empire State Manufacturing Index
Country
Time (IST)
Actual
Forecast
Previous
Impact
US
6:00pm
-
-
9.6
Medium
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