Commodity Research Report Ways2Capital 21 March 2016


Posted March 21, 2016 by ways2capital

Tepid import of gold in the last two months (Feb-March) of this financial year will help the government save some foreign exchange. The import bill for 2015-16 is now estimated at $31.5 billion, almost nine per cent lower from 2014-15.

 
MCX - WEEKLY NEWS LETTERS
INTERNATIONAL NEWS
✍ Gold
Tepid import of gold in the last two months (Feb-March) of this financial year will help the government save some foreign exchange. The import bill for 2015-16 is now estimated at $31.5 billion, almost nine per cent lower from 2014-15. Import in February was 35-38 tonnes or $1.4 bn. March has begun with marginal import; due to jewelry strike to oppose excise duty, the month might end with gold import of $500-700 million (17-23 tonnes).“The 2015-16 average price is likely to end lower by approximately eight per cent from 2014-15. Most imports were primarily during months when prices were lower," said Sudheesh Nambiath, lead analyst at GFMS, Thomson Reuters. The February import was half of January's, with a steep $30-50 per ounce discount to the cost of import.
Gold edged lower on Friday, as the dollar steadied above a five-month low, but the metal remained on track for a weekly gain after the Federal Reserve scaled back rate increase expectations. The U.S. central bank held interest rates steady on Wednesday and indicated it would tighten policy this year, but fresh projections offered by the Fed showed policymakers expect two quarter-point increases by year-end, half the number forecast in December. Expectations the Fed would raise rates steadily this year had faded since the bank's initial hike in December, as concerns about global growth roiled financial markets.

✍ Crude oil
Crude oil prices settled lower on Friday after the U.S rig count rose for the first time since December, renewing worries of a supply glut after an output freeze proposal helped boost the market to 2016 highs and multiweek gains.
US oil futures touched new highs for 2016 on Friday and were set to post gains for a fifth straight week on growing optimism that major producers would strike a deal to freeze output, while a more benign interest rate environment also supported prices. US crude was up 3 cents at $40.23 barrel, after rising to as much as $40.55 - higher than the previous peak of $40.36 reached on Thursday. The benchmark had surged 4.5% to close at $40.20 in the prior session. Brent crude's front-month contract was up 2 cents at $41.56 per barrel and earlier rose to $41.71, a new high for the year. It finished up $1.21 at $41.54 a barrel on Thursday. Both contracts have traded down at times throughout the day, suggesting resistance at around $40. "The market is trying to price in the moves by the big producers," said Avtar Sandu, senior commodities manager at Phillip Futures in Singapore. "Otherwise, $40 oil is actually pretty expensive given the oversupply in the market." Oil prices have surged more than 50% from 12-year lows since the Organization of the Petroleum Exporting Countries (OPEC) floated the idea of a production freeze, boosting Brent from about $27 and US crude from around $26. US oil is heading for a fifth week of gains, while Brent is on course for a fourth weekly increase, the longest rising streak in about a year for both benchmarks.
Despite the retreat, oil posted multi-week gains, with Brent up for a fourth straight week and U.S. crude a fifth week in a row. Both benchmarks rose about 2 percent this week. Global oversupply in oil had knocked crude prices down from mid-2014 highs above $100 a barrel to 12-year lows earlier this year, bringing Brent to around $27 and U.S. crude to about $26. Over the past two months, prices rallied to above $40 after the Organization of the Petroleum Exporting Countries (OPEC) floated the idea of a production freeze at January's highs. The combination of declining oil output, smaller crude stockpile builds and surging gasoline consumption in the United States also helped the recovery, although some analysts said the rally had been overdone

✍ Natural gas
U.S. natural gas futures ended lower on Friday as the market focuses more on the warm weather forecast for much of the rest of March instead of the snowstorm expected to hit the Northeast this weekend on the first day of spring.
Natural Gas futures ended flat in the domestic market on Friday as traders weighed near-term forecasts for colder than earlier anticipated temperatures across the US Midwest, which may boost gas-fired heating demand for the fuel, against hefty storage levels with US gas stockpiles declining by just one to 2.478 trillion cubic feet in the week ended March 11, 2016. Total US gas storage levels are around 807 billion cubic feet above the five-year average of 1.671 trillion cubic feet and 998 billion cubic feet above levels in the same period a year ago. At the MCX, Natural Gas futures for March 2016 contract closed at Rs 127.3 per mmBtu, unchanged, after opening at Rs 127.9, against the previous closing price of Rs 127.3.

✍ Copper
Copper slipped from a four-month high on Friday as investors locked in gains after a rally prompted by a more dovish U.S. rate outlook, though stronger oil prices and lower inventories cushioned the fall.
Copper futures advanced during evening trade in the domestic market on Friday amidst a pickup in physical demand for the industrial metal in the spot market and on optimism that a recovery in the property market in China, the world’s biggest metals consuming nation, may bolster demand. New Chinese home prices rose in 47 cities in February, up from 38 in January, signaling a recovering property market, while the Yuan strengthened after China’s central bank raised its reference rate by the most since November. At the MCX, Copper futures for April 2016 contract were trading at Rs. 340 per 1 kg, up by 0.41 per cent, after opening at Rs. 339, against the previous closing price of Rs. 338.6. It touched the intra-day high of Rs. 343.85. (At 16:53 PM).

Copper also drew support from declining physical stocks in London Metal Exchange warehouses. Copper in the warehouses stood at 158,275 tonnes, down about 30 percent since late November, though much of the inventory has just moved to warehouses monitored by the Shanghai Futures Exchange. The pullback in copper prices was limited by tentative signs of recovery in China's property sector, which is China's second-biggest copper consumer after the power industry.

✍ Lead
Lead prices fell by 0.45 per cent on Friday at the domestic markets due to low demand from battery-makers and other consuming industries at the domestic spot market as well as a weak trend at the global market. At the MCX, Lead futures, for the March 2016 contract, is trading at Rs 120.70 per kg, down 0.45 per cent, after opening at Rs 122, against a previous close of Rs 121.25. It touched an intra-day low of Rs 120.45 till the trading. (At 3.33 PM today). However, losses were limited due to the decline in the lead stockpiles at the London Metal Exchange (LME) on account of the strong demand for the commodity. LME lead stocks fell by 1925 metric tonnes to 164325 metric tonnes as on March 18, 2016.

✍ Zinc
Zinc futures posted modest gains in the domestic market on Friday as investors and speculators booked fresh positions in the industrial metal amid a pickup in physical demand for zinc in the domestic spot market. Optimism that a recovery in the property market in China, the world’s biggest metals consuming nation, may bolster demand, also boosted sentiment. New Chinese home prices rose in 47 cities in February, up from 38 in almost at

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Last Updated March 21, 2016