Euro trades marginally up against US Dollar today after 0.3% gains yesterday

Transcription

1 MARKET HIGHLIGHTS LME Copper trades marginally higher today after 0.4% decline yesterday Euro trades marginally up against US Dollar today after 0.3% gains yesterday US Dollar Index trades steady today after a flat close yesterday Most of the Asian equities trade higher today tracking gains in US markets yesterday German Gfk Consumer Climate for June rose marginally to 10.2 following 10.1 in May Norwegian producer Norsk Hydro said it would increase aluminium output by 35,000 tonnes per year Greece claims an agreement to unlock bailout funds is near, while the European Commission says a deal isn t done Focus today will be on UK GDP, US initial jobless claims and Pending Home sales For Private Circulation Only May 27, 2015 MCX India (Rs/kg) Aluminium 29-May % Copper 30-Jun % Lead 29-May % Nickel 30-Jun % Zinc 30-Jun % Shanghai (Yuan/MT) Copper Jun % Copper Jul % Copper Aug % COMEX (USD cents/lb) Copper Jun % Copper Jul % Copper Aug % LME (USD/tonne) Aluminium 3 Month % Copper 3 Month % Lead 3 Month % Nickel 3 Month % Zinc 3 Month % LME Inventories Opening Closing Net C/W Commodity Stocks Stocks Change Total C/W* Ratio* Aluminium % Copper % Lead % Nickel % Zinc % *C/W- Cancelled Warrants Major Currencies Currency Type Close PCP Change % Change USD Index Spot % EUR USD Spot % USD INR Spot % USD JPY Spot % GBP USD Spot % Base Metals Please See Disclaimer on the Last Page 1

2 Market Analysis LME Copper trades higher in early trades today after a weaker close yesterday. LME Copper hit lows of $ to end 0.4% lower at $ a ton. In other base metals, Aluminium prices too fell tracking weakness in Copper prices. However, Lead, Nickel and Zinc prices closed on a higher note. Copper prices came under pressure tracking demand worries from top consumer China while worries over rising exports from China weighed on Aluminium prices. However retreat in US Dollar from day s high capped the downside. Industrial metals at LME are trading higher in early trades today. Lending support to the prices is choppiness in US Dollar Index along with gains in global equity indices. US Dollar Index trades marginally lower today following a flat close yesterday. The currency came off the highs yesterday amid reports that Greece and its creditors are closer to striking a deal so the cash-strapped nation would avert default in the coming days. A weaker US Dollar makes commodities priced in US Dollar cheaper for holder of other currencies thus increasing its appeal as alternate investments. Meanwhile most Asian markets are trading higher today tracking gains in US markets yesterday. In US, both Dow Jones and S&P closed 0.67% and 0.9% higher respectively. Further lending support to the prices is hopes of improving demand from China in coming months following string of infrastructure announcement by Beijing. China state planning agency in an attempt to spur economic activity in the nation listed more than 1,000 proposed projects totaling 1.97 trillion Yuan inviting private investors to help fund, build and operate. Copper is used extensively in construction. The gains may however be capped tracking fragile global health which in turn is hurting demand prospect of all the base metals. In top consumer China slew of weaker data is indicating that the economy is decelerating more rapidly than market expectation. Data from the nation last week showed that factory activity contracted for third straight month in May. China s HSBC Flash Manufacturing PMI came in at 49.1 in May, below 50 level mark that divides expansion and contraction, but was better than April s final reading of signaling softening pace of economic growth in the region. Further capping the upside is reduced risk appetite due to Greece debt crisis. In Greece worries that the nation will default on its payment to IMF have escalated after the government have said openly that Greece does not have the money to pay 300 million euros to the IMF on June 5. Sentiments had surged after Greek Prime Minister Alexi Tsipras that the country was "close" to a deal. However the relief was short lived as European creditors dashed hopes that Greece was finally nearing the end-stage of its bail-out negotiations, insisting both sides remained far apart on securing the embattled country s future in the Euro zone. Copper prices may further come under pressure tracking rising surplus in physical market. According to the International Copper Study Group, global refined copper was in surplus of 153,000 tonnes in first two months of 2015 compared with a 148,000 tonnes deficit in the same period a year earlier. However decline in stocks at exchange warehouses may cap the downside. Also Aluminium prices may come under pressure tracking rising exports from China and falls in premiums or surcharges for physical metal deliveries across globe. In other metals, Nickel prices may continue to remain under pressure amid ample supply and weak demand. Further putting pressure on the prices is record high stocks at LME warehouses. Overall base metals may witness mixed movement tracking mixed cues. Markets await clarity on Greece debt deal which may affect Euro Dollar movement and thus commodities in turn. Also focus will be on US data as it will impact US Dollar Index. Meanwhile in US too spate of mixed macro-economic data is Base Metals Please See Disclaimer on the Last Page 2

3 Outlook Copper- MCX Copper may note some gains tracking slight recovery in international market however the bias remains weak. LME Copper trades higher in early trades today after 0.4% decline yesterday. Copper prices are of the lows amid retreat in US Dollar from yesterday s high as concerns over Greece debt crisis ease. Also lending support to the prices is hopes of demand revival from China as the nation announces slew of infrastructure projects along with steady decline in stocks at LME warehouses. Stocks at LME fell by 300 tonnes yesterday following 7175 tonnes last week. The gains may however be capped amid demand uncertainty tracking fragile global health. Also capping the upside is choppiness in global equities and uncertainty over timing of Fed s rate hike. Prices may note some gains today however we continue to maintain bearish view and recommend to go short on rallies tracking weak fundamentals. Focus today will be on UK GDP, US initial jobless claims and Pending Home sales. Data from US will affect US Dollar movement and commodities in turn. Aluminum- MCX Aluminum may note some gains tracking rebound in international exchange. LME Aluminium trades 0.5% higher today after prices fell by 0.8% yesterday. Prices are taking a breather after the metal hit one 15 month low of $1731 yesterday. Also supporting prices is choppiness in US Dollar along with lower stocks and higher cancelled warrants at LME warehouses. Stocks at LME fell by 8300 tonnes yesterday to lowest level since May 2009 while cancelled warrants stood at 46.06%. The gains may however be capped amid demand uncertainty coupled with worries over supply glut tracking steady rise in exports from China. Even though we maintain bearish view on Aluminium we suggest to wait for prices to hold at lower levels before creating fresh shorts. Zinc- MCX Zinc may note gains today tracking firmness in international exchange. LME Zinc trades higher today after closing 0.4% higher yesterday. Supporting prices is gains across base metals complex amid choppiness in US Dollar. Also supporting prices is expectation of supply tightness this year. The gains may however be capped amid recent jump in stocks at LME warehouses and weak demand in China s physical market. Stocks at LME fell by 2050 tonnes yesterday following tonnes gain last week. Zinc prices may note gains today and can be brought but maintaining strict stop loss. Nickel- MCX Nickel may note gains tracking gains in international exchange. LME Nickel trades higher in early trades today after rebounding 1.2% yesterday. Nickel prices at LME have pared some of its losses following more than 9% drop last week. Short covering and choppiness in US Dollar are lending support to the prices. The gains however remain capped as the metal suffers from weak fundamentals. Prices continue to be under pressure as Nickel market remains well supplies despite Indonesian ban on ore along with record high stocks at LME warehouses. Stocks at LME rose by 1824 tonnes yesterday hitting alltime high of tonnes. We continue to maintain bearish view in Nickel and recommend going short on rallies tracking weak fundamentals. Lead- MCX Lead may note some gains tracking cues from international exchange. LME Lead trades higher today after 0.7% gains yesterday. Prices are seeking support from expectation of supply tightness in coming months along with falling stocks at LME warehouses. Also US Dollar has come off its high to trade little changed today thus lending support to the prices. The gains may however be capped amid bleak demand outlook from top consumer China along with steady decline in cancelled warrants ratio at LME. Lead stocks at LME fell by 2375 tonnes yesterday while cancelled warrants eased to 17.64% from 19.3% on Tuesday. Lead prices may trade with a positive bias today and we suggest going long for smaller target. Commodity Support Resistance Trend Aluminium Sideways Copper Sideways Lead Sideways Nickel Sideways Zinc Sideways Base Metals Please See Disclaimer on the Last Page 3

4 Economic Calendar Date Time Country Event Actual Forecast Previous Importance 26-May 18:00 USD Durable Goods Orders m/m -0.50% -0.40% 4.70% High 18:30 USD S&P/CS Composite-20 HPI y/y 5.00% 4.60% 5.00% Low 19:15 USD Flash Services PMI Low 19:30 USD CB Consumer Confidence High USD New Home Sales 517K 510K 481K Medium USD Richmond Manufacturing Index 1-3 Low 27-May 5:20 JPY Monetary Policy Meeting Minutes Medium 11:30 EUR GfK German Consumer Climate Medium 28-May 14:00 GBP Second Estimate GDP q/q 0.40% 0.30% High 18:00 USD Unemployment Claims 270K 274K High 19:30 USD Pending Home Sales m/m 1.00% 1.10% Medium 29-May 4:35 GBP GfK Consumer Confidence 4 4 Low 5:20 JPY Prelim Industrial Production m/m 1.10% -0.80% Medium 11:00 INR GDP y/y 7.50% 11:30 EUR German Retail Sales m/m 0.80% -2.30% Medium 18:00 USD Prelim GDP q/q -0.80% 0.20% High 19:15 USD Chicago PMI Medium 19:30 USD Revised UoM Consumer Sentiment Medium Source: Forex Factory and Reuters Base Metals Please See Disclaimer on the Last Page 4

5 Price Movement on LME last week Exchange Commodity Contract High Low Close PCP Change % Change 2015 High 2015 Low LME 3 Aluminium 1,863 1,757 1,768 1, % 1, month Copper 6, ,143 6,162 6, % 6, Month Contract Lead 2,003 1, ,947 1, % 2, Forward (USD/ Nickel 13,950 12,680 12,710 13, % 15, Tonne) Zinc 2, ,163 2,178 2, % 2, Stocks movement on Exchange Warehouses Weekly Stock Status 2015 Exchange Commodity 22-May May-15 Change % High Low Aluminum % Copper % LME Stocks Lead % Nickel % Zinc % Aluminum % SHFE Stocks Copper % Lead % Zinc % COMEX Copper % Base Metals Please See Disclaimer on the Last Page 5

6 Aurobinda Gayan- Vice President Research Fundamental Team Faiyaz Hudani- AVP Research Oilseeds; Grains Sudha Acharya-Sr. Research Analyst Pulses; Spices; Cotton Madhavi Mehta- Sr. Research Analyst Bullion; Energy Priyanka Jhaveri- Sr. Research Analyst Base Metals Technical Team Tapan Patel- Sr. Research Analyst Shabbir Kayyumi- Research Analyst Disclaimer This document is not for public distribution and has been furnished to you solely for your information and must not be reproduced or redistributed to any other person. Persons into whose possession this document may come are required to observe these restrictions. This material is for the personal information of the authorized recipient and we are not soliciting any action based upon it. This report is not to be construed as an offer to seller or solicitation of an offer to buy any commodity or commodity derivative to any person in any jurisdiction where such an offer or solicitation would be illegal. It is for the general information of clients of Kotak Commodity Services Limited. It doesn't constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. We have reviewed the report, and in so far as it includes current or historical information, it is believed to be reliable though its accuracy or completeness cannot be guaranteed. Neither Kotak Commodity Services Limited, nor any person connected with it, accepts any liability arising from the use of this document. The recipients of this material should rely on their own investigations and take their own professional advice. Price and value of the commodity referred to in this material may go up or down. Past performance is not a guide for future performance. Certain transactions including those involving commodity derivatives involve substantial risk and are not suitable for all investors. Reports based on technical analysis centers on studying charts of a commodity's price movement and trading volume as opposed to focusing on a commodity's fundamentals and as such may not match with a report on a commodity's fundamentals. We do not have any information other than information available to general public. The report is based on information from sources like respective industry associations, FICCI,CII, companies, media and other public sources. Opinions expressed are our current opinions as of the date appearing on this material only. While we endeavor to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice. Our proprietary trading may make trading decisions that are inconsistent with the recommendations expressed herein. We and our affiliates, officers, directors, and employees worldwide may: (a) from time to time, have long or short positions in, and buy or sell the commodities mentioned herein or (b) be engaged in any other transaction involving such commodities and earn brokerage or other compensation or act as a market maker in the commodity/(ies) discussed herein or have other potential conflict of interest with respect to any recommendation and related information and opinions. The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject commodity and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report. No part of this material may be duplicated in any form and/or redistributed without Kotak Commodity Services Limited's prior written consent. Registered Office: Kotak Commodity Services Ltd., Nylon house, 1stFloor, Dr. Annie Besant Road, Opp. Sasmira, Worli, Mumbai-30 CINU65910MH1987PLC Fax: Customer care: Base Metals Please See Disclaimer on the Last Page 6