Saturday, May 31, 2014

LME Will Delay Start to Position Reports Until August

LME Will Delay Start to Position Reports Until August
The London Metal Exchange, the world’s largest metals bourse, delayed starting commitment of traders reports until August to allow more time for members to classify positions.
The reports will be published weekly starting Aug. 5, it said in a notice to members today. The first report was initially scheduled for July 1 after ending a one-month market consultation on May 23. The extension will enable members enough time to submit information on positions.
“The LME acknowledges member feedback in respect of the timeline proposed by the LME for classification of predominant business activity,” the bourse said in the notice. The LME designed the reports to be consistent with other markets and will continue to keep its format under “active review.”
The 137-year-old bourse is joining NYSE Liffe and ICE Futures Europe in reporting trader positions similar to those issued by the U.S. Commodity Futures Trading Commission. Consumers and producers of metals asked the bourse to increase information about the market. The exchange started this month publishing reports disclosing metal wait times and inventories held by individual warehouse companies.
Category one to four members are required to classify their positions and those of their clients into types of activity. The reports will break down market open interest by category of participant, similar to the CFTC, including producer, merchant, processor or user; broker dealer or index trader; money manager; other reportables and those not defined.

More Transparency

“While a COT report will be helpful in terms of increasing apparent transparency (albeit backwards looking owing to the weekly nature of the report), the misclassification of a few major market players will have a significant impact in terms of how the report can be interpreted,” Leon Westgate, an analyst at Standard Bank Plc in London, said in a report today.
The CFTC releases weekly reports on positions by type and NYSE Liffe, the derivatives arm of NYSE Euronext, began giving similar information for agricultural products in 2011. ICE Futures Europe started publishing Commitments of Traders Reports in Europe for Brent and gasoil in 2011.

Marine product exports zoom to record $5 billion

Marine product exports zoom to record $5 billion
Exports of marine products touched a record $5.007 billion during 2013-14.
At a news conferenceLeena Nair, chairperson of the Marine Products Export Development Authority (MPEDA), said the total export earnings were $5.007 billion (₹30,213 crore.) In rupee terms, the growth was a whopping 60 per cent over the previous year, though in dollar terms this was 42.60 per cent. In the previous year, the earnings were $3,512 million.
In quantity terms, 9,83,756 tonnes were exported, an increase of around 6 per cent. Fish items were the largest chunk in terms of quantity, though when it came to value, frozen shrimp was the biggest money earner. More than three lakh tonnes of shrimp were exported, of which 73 per cent was cultured. There was also a 35 per cent increase in unit value – black tiger shrimp secured the highest value.
Among regions, South-East Asia continued to be the largest buyer of Indian marine products with a share of 26.38 per cent, followed by the US with a share of 25.68 per cent. The European Union is the third largest buyer with 20.24 per cent share, followed by Japan at 8.21 per cent, other countries 8.20 per cent, China 5.85 per cent and West Asia 5.45 per cent.
One reason for the higher exports is increased production of L. Vannamei shrimp, whose exports to the US market jumped to 59.63 per cent. Export of frozen shrimp rose by 7.38 per cent in quantity terms and 28.23 per cent in dollar terms.
Nair said lower exports from Thailand and other prawn-producing countries because of a disease that had afflicted their aquaculture. On the other hand, depreciation of the rupee against the dollar and increased production of vannamei in Andhra Pradesh and other States helped in higher earnings from prawns. The quality of Indian prawns and other marine products had improved remarkably – contributing significantl to the rise in unit price. Participation in major global seafood fairs also had helped.

Friday, May 30, 2014

It's Morning in India: Narendra Modi's Pro-Business Policies Point to Strong Sectors Growth

As some of you might recall, Ronald Reagan's now-famous 1984 presidential campaign, "Morning in America," renewed many Americans' confidence in this country's financial future. Likewise, the May 16 election of Narendra Modi--whose campaign slogan, "Good times ahead," taps into the same sense of optimism--couldn't come at a better time for India and the surrounding region.
Sworn in on Tuesday, Modi's pro-business, small-government policies have already prompted many citizens of the world to liken him to such transformative leaders as Reagan and Margaret Thatcher. Because he has vowed to widen India's doors to foreign investment, rehabilitate its crumbling--or, in many regions, nonexistent--infrastructure, deregulate the retail industry and loosen the red tape that has halted domestic coal production, investor confidence in the South Asian country has surged like never before.
For the past six months, foreign investors have bought up more than $16 billion in Indian stocks and bonds in anticipation of Modi's win and hold approximately 22 percent of Mumbai-listed equities, valued at nearly $280 billion. Since the election, the Indian markets have been bullish, with the rupee crossing 59 levels against the dollar. These activities have made the world's largest democracy the top performer this year among the four BRIC economies.
"We want more strength for the wellbeing of the country," Modi said after declaring victory. "I see a glorious and prosperous India."

Modi has a proven track record of turning economies around.

As head of the state of Gujarat, a position he held prior to being elected prime minister, he oversaw annual economic growth of 10 percent. He is also credited for bringing electricity to all 60.4 million Gujarat residents--a first for India.
One of his loftier goals is to do the same for all 1.2 billion Indians using clean power generation such as wind and solar. Currently, 400 million citizens--more than the combined populations of the U.S. and Canada--are without power. The plan is that by 2019, every home will be able to run at least two light bulbs, a cooker and a television.
Such a colossal undertaking as bringing power to every home will require the import and production of untold amounts of metals such as copper and steel, not to mention the construction and rehabilitation of the nation's poor infrastructure, which is decades behind China's.
According to Ajay Piramal, Chairman of the Piramal Group, one of the roads to India's prosperity is "infrastructure development. Reviving infrastructure projects by streamlining approval and decision-making processes will be critical. By 2019, the structural growth rate of India should be at 8 percent or higher."
It's Morning in India: Narendra Modi's Pro-Business Policies Point to Strong Sectors Growth

Under the new prime minister's watch, the growth of industrials and materials is very promising.

India is already the fourth-largest steelmaker in the world, having produced 7.25 million tonnesin March alone. But with the implementation of new infrastructure and energy projects, steel production has the potential to explode.
The same can be said of coal. Even though India, the world's second-most populous country, is rich in coal, mining has historically been stymied as a result of tortuous bureaucracy and stateism. To facilitate foreign investment in the resource and boost product output, Modi is considering breaking up Coal India Ltd., India's state-controlled mining company.
With more jobs up for grabs, more Indians will be able to afford the sort of lifestyle and consumption habits that many Americans enjoy. As I've previously discussed, gold is a prime gift to give and receive in India during religious holidays and celebrations. A robust working class will ensure that gold continues its trend as a desired and accessible commodity.
It's too early to tell if morning has indeed arrived in India. To be sure, the nation faces many challenges that block its path to prosperity, including debilitating bureaucracy, an inefficient agricultural sector, low literacy rate and widespread poverty. But as I often say, government policy is a precursor to change, and with Modi at the helm, "good times ahead" sounds like more than an empty promise. Provided his administration can make good on his many ambitious plans, investment in the energy, industrials, materials and utilities sectors could conceivably see fair returns.
It's Morning in India: Narendra Modi's Pro-Business Policies Point to Strong Sectors Growth

Aluminum giant Alcoa gets into jet engine parts business

Aluminum giant Alcoa gets into jet engine parts business

Alcoa hopes to cash in on the boom in commercial aircraft orders by building a new plant that will make engine parts for big jets.
Company officials announced Thursday that they will build a $100 million plant in La Porte, Indiana, to make nickel-based engine parts for commercial airliners. Alcoa already makes the same components - in smaller sizes - for engines that go on business jets and planes flown by regional airlines.
Boeing and Airbus are stepping up production as airlines order new, more fuel-efficient planes. Asian airlines in particular are expected to grow rapidly as a booming middle class yearns to travel.
"This is a massive growth market, more than 8 years of backlog," CEO Klaus Kleinfeld said in an interview. Alcoa expects the aerospace industry to grow by 8 percent to 9 percent this year.
Airlines have long gone through a boom-and-bust cycle, but Kleinfeld said he wasn't worried about that. He said smarter management and Asia's changing demographics will help the airlines.
The Indiana plant will make parts that form the rib cage around a jet engine's vital parts, so its customers are likely to be the big engine manufacturers such as GE and Rolls Royce. Alcoa wouldn't disclose customers, but said it has enough long-term contracts to support the facility, which is due to be completed late next year and eventually employ 329 workers. Alcoa said it could get up to $4 million in state tax credits for job creation and another $7.1 million in city tax incentives over 10 years.
The plant is part of Alcoa Inc.'s strategy to downplay its roots as a mining and aluminum-smelting company, which includes a large smelter near Goose Creek. Aluminum prices haven't recovered from the deep recession in 2008, and Alcoa has been idling smelters to reduce capacity and cut costs.
The company has been increasing its focus on producing finished aluminum products for aerospace, autos and other industries. Those segments account for more than half of the company's revenue and three-quarters of its after-tax operating income.

Nyrstar Decides To Close Its Zinc Plant

Nyrstar Decides To Close Its Zinc Plant
The Zinc plant at the Nyrstar smelter will shut down which will costs around 124 jobs by the end of 2016. However, there is great hope for future growth. The plant closure is a business decision as the plant has been making a great loss. There will be no forced redundancies, but the 124 employees now at the zinc plant will not be replaced.
Two week ago, positive news about Nyrstar reported that the company would invest around $514 million for the plant enhancement with the support of the State Government. Amid this, the news relating the plant closure came. The redevelopment is scheduled to finish by 2016 and it is reported that around 400 jobs would be created in the construction phase, but it is not yet clear about the overall job gains and losses.
On Wednesday night, the Chamber of Commerce and Industry networking forum at the golf club discussed about the subject concerning the job loss due to the closure of the zinc plant. Bertus de Villiers, Nyrstar vice-president for metals refining confirmed that the 120 plus workers would affect by the decision of closure and they would be redeployed, but their positions would not be filled.
He said that the decision to close the plant is basically a business decision as it had been making loss of around $20 million for the last four years. He added that it was a difficult but necessary decision and they were able to do this without taking the process of forced redundancy and were not affecting the employees by this negative decision. He added that the plant would run for another two months and of if they could make this things work, there would be plenty of opportunity for growth. 

Strong demand outlook to lend support to aluminum prices in 2015

Strong demand outlook to lend support to aluminum prices in 2015
The aluminum oversupply will be offset by strong demand growth outlook, lending support to aluminum prices in 2015, says a recent study report by Capital Economics.

The addition of capacities in the Middle East and China has lead to surplus in aluminum market. Aluminum production by China grew 6% in 2013. The production growth is expected to reach 10% in China this year.

According to Capital Economics, the increased supply of aluminum will be offset by the rising aluminum demand from traditional consuming sectors. The recovering automotive and construction sector in the developed world, especially the US looks positive for aluminum. Also, the rise in production of consumer goods from China will keep the aluminum demand high.

Further, the supply surplus will reduce considerably in 2015 as China curtails production at non-performing smelters. Major aluminum producers elsewhere have announced production cuts. The US –based Alcoa plans to cut one-fifth of its capacity by 2015.

The report forecasts that the aluminum price is likely to reach $2,000 per mt by end-2015, which is nearly 12% higher than the current LME price for the metal.

Participation of banks in commodity markets long overdue

Participation of banks in commodity markets long overdue
They enable even small farmers to reap the benefits of hedging

While much has been talked about in various contexts recommending banks’ participation, the latest Report of a Finance Ministry committee suggesting steps to fulfill the objectives of price discovery and risk management in the commodity derivatives market, says: “… One way to reduce the cost of capital for the commodities trader is, to make banks … an integral part of trading in commodity derivatives.”
It is a fact that there are regulatory restrictions on part of banks too that restrict their participations in commodity futures markets. But, the fact remains that their participation in commodity exchanges is a win-win situation for all: it helps the banks, it helps commodity markets,and in the process, it helps the economy as a whole.
Risk management platform
While the above-mentioned report recognises that banks’ participations in the commodity derivatives market will contribute to the depth and width of the market, what this process also contributes to is the availability of an unparalleled risk management platform for the banks themselves, as banks also need to manage risks arising from commodity price volatility.
Thanks to globalisation of the Indian economy and business expansion of Indian banks, their exposure to rising commodity price volatility is significantly high – 19 per cent according to some estimates made in 2011-12. Yet, while banks have been allowed to manage other risks in their portfolios, they do not have any mechanism to hedge commodity price risk in an effective and transparent manner, barred as they are from entering the commodity derivatives market.
Intermediation, aggregation
Further, banks can act as intermediaries and aggregators, facilitating the risk management actions of farmers and other small players who on their own may find considerable barriers to enter this market. World-over, there are examples galore on banks’ participation in exchange-traded commodity derivatives market on behalf of farmers, enabling the latter manage risk exposure better and increase their incomes.
Mention may be made of Rabobank’s intervention in Tanzania and Nicaragua and Banco do Brasil’s intervention in the Brazilian agricultural market through issue of exchange-traded Cedula Producto Rural contracts. Many of these interventions are made through designing and offering customised hedging solutions fulfilling the requirements of farmers.
Besides, by aggregating small participants, banks enable even small farmers to reap the benefits of hedging. On a similar note, the non-farm sector, especially the small and medium enterprises, too can be a significant beneficiary of the commodity futures market, which can be increased manifold by the facilitative role provided by banks.
Releasing scarce resources
At the micro level, with a comprehensive risk management policy that encompasses commodity price risks, banks’ financial and human resources can be freed to cater to more important strategic functions. Under the evolving international regulatory regime where norms on credit and provisioning are increasingly being linked to risk assessment of banks’ portfolios, hedging against commodity price movement will actually contribute to freeing of financial resources – enabling not just achievement of priority sector targets for Indian banks, but also their overall business expansion.
Through focused deployment of appropriate credit products, these developments could, at the macro level, go a long way in smoothening and quickening the credit cycle, thereby enhancing productivity of credit.
Better liquidity, hedging
From the commodity market’s perspective, banks’ participation will help in providing the market with the much-needed long-term traction. This will help the long-term hedgers’ participation on the one hand, by reducing the overall costs of transactions (including the impact costs), and will help enhancing the hedging efficiency. There has often been a complaint from large corporates about lack of long-term traction in the Indian comexes, which inhibit their hedging efficacy. Banks’ participation will help ameliorate that concern.
A “Pareto” Improvement
Here lies the “Pareto” improvement through banks’ participation in Indian comexes. On the one hand, it will be in the interest of banks’ own sustainable growth.
On the other hand, it will help them achieve the goal of inclusive growth through market inclusion of millions of commodity producers. Thus, banks’ participation in the commodity derivatives market does not stand as a policy option; it is a fundamental economic need of the day that is long overdue

Barclays changes view on Indian Rupee after election

Barclays changes view on Indian Rupee after election
Barclays calls the Indian rupee one of its favorite high-yielding emerging-market currencies. The bank now sees the Indian currency at 58 rupees to the dollar in one and three months, compared to 60 previously. 

Barclays said that its more constructive rupee view reflects a combination of supportive factors including, an election result has encouraged portfolio inflows, a narrowing current account deficit and a globally supportive environment for carry trades. 

“Central-bank intervention will likely continue to limit the pace of INR appreciation against the USD, but the large size of portfolio flows implies that modest appreciation is likely to be tolerated by the RBI (Reserve Bank of India), in our view,” said Barclays. 

Barclays continues to think that a renewed bout of INR depreciation is unlikely, given the much-improved fundamental backdrop, led by a markedly smaller current account deficit, higher FX reserves, largely range-bound inflation and enhanced RBI policy credibility.

Rupee was as muscular as 69.22 rupees back in August, and the weak Indian currency at the time was one of the factors – along with gold-import restrictions-- blamed for reduced gold buying in the country, since a weak rupee makes gold more expensive for Indians.

Societe Generale remains bullish on Zinc

Societe Generale remains bullish on Zinc
Many market participants in the base-metals arena looked favorably upon zinc, said Robin Bhar, metals analyst with Societe Generale. 

“It is anticipated that recent and expected closures of a number of zinc mines over this year and next would lead to a supply crunch underpinning a rally in prices,” said Bhar, outlining factors discussed at a recent zinc conference in Istanbul. Bhar cited closures and expected closures in Canada, Ireland and Australia. 

However, mine closures are the only known certainty. There are many unknowns regarding zinc’s supply/demand fundamentals, such as demand growth, substitution, how much higher prices would incentive new projects and the Chinese mining sector. 

“A supply crunch does look inevitable but it’s likely magnitude and duration is highly uncertain and subject to a variety of factors,” Bhar added.

Thursday, May 29, 2014

Chart Of The Day: Global Youth Unemployment

We have some bad news... for Africa: according to the latest data released by the International Labor Organization, your youth unemployment problem is almost as bad as that of Europe.Chart Of The Day: Global Youth Unemployment
Maybe more to the point, just what is it about those bracing Mediterranean sea breezes (not to mention mandated Eurozone "political capital" and relentlessly liberating - of one's job - globallization) that makes the young people in the adjoining countries choose to do pretty much anything but work?

Global Nickel market surplus dropped over 50% over the year in March: INSG

Global Nickel market surplus dropped over 50% over the year in March: INSG
According to International Nickel Study Group (INSG), the surplus in global nickel market dropped significantly during the month of March this year. The global nickel market surplus totaled 3,600 tons in March this year. This is 52.6% down when compared with the surplus data during March last year. The global nickel market surplus during March 2013 was 7,600 tons.
The nickel surplus in March dropped when compared with the previous month. The global nickel surplus fell by 25% month-on-month during March. The production of Nickel during the month of February this year exceeded the monthly demand by 4,800 tons.
INSG notes that that the global nickel surplus during the three-month period from January to March this year dropped significantly over the previous year. The surplus narrowed to almost one-third during the initial three-month period of the year. The global surplus of nickel dropped from 38,900 tons during January to March 2013 to 13,400 tons during the corresponding three-month period this year.
The International Nickel Study Group (INSG) - an autonomous, intergovernmental organization established in 1990 and located in Lisbon, Portugal, is responsible for collection and publication of improved and latest statistics on world nickel market.

Declining supply levels likely to propel zinc prices higher

Declining supply levels likely to propel zinc prices higher
With market deficit set to worsen, the zinc prices may reach new heights in the near future. Analysts see bright chances of zinc outperforming the metal pack as nickel did in 2014. The Russian crisis and the Indonesian ore ban saw nickel prices surging nearly 40% YTD.
The declining supply levels are expected to drive the zinc prices higher. According to BofA Merrill Lynch estimates, the zinc prices are poised for a 15% upside from current levels by 2015. The zinc price is all set to breach $2,400 per tonne as early as next year. The zinc prices have remained almost flat since start of the year at around $2,100 per tonne.
MMG Limited that operates Century Mine in Queensland have already announced that the zinc production from their mines could drop to 465,000 tonnes this year, as against the 488,000 tonnes during 2013 and 515,000 tonnes during 2012. A series of mine closures scheduled for the second half of the year may aggravate the supply deficit.
On the other hand, the global economic recovery has bolstered the demand for zinc. The metal is mainly used for galvanizing purposes by the steel industry. Zinc is also used extensively in battery production industry and automobile industry. According to report released by the International Lead and Zinc Study Group (ILZSG), the apparent demand for zinc in China grew by 7.6% in 2013. Incidentally, China accounts for almost half of the global zinc consumption.
According to industry sources, the zinc output from mines is expected to remain subdued in the near future. On the other hand, global demand for zinc is poised to scale new heights. This could drive the zinc prices much higher, thus making it the star of the base metal pack.

Wednesday, May 28, 2014



Google Inc reveals self-driving vehicle prototypes designed in collaboration with several automotive partners

Google Inc reveals self-driving vehicle prototypes designed in collaboration with several automotive partners

Google Inc reveals self-driving vehicle prototypes designed in collaboration with several automotive partners

Google Inc reveals self-driving vehicle prototypes designed in collaboration with several automotive partners

The co-founder of Google Inc. – Mr. Sergey Brin revealed that the company has designed its own self-driving vehicles. The company developed a two-seated prototype that transports passengers at the push of a button.
Mr. Brin said in an official statement, which was cited by Bloomberg: “We took a look from the ground up as to what it would be like if we had self-driving cars in the world. We’ve worked with partners in the Detroit area, Germany and California.”
According to the company’s statement, Google has been working on the project for the past four years. The company revealed that the vehicle prototype lacks a steering wheel, accelerator pedal or brake pedal and basically looks like a gondola on wheels. The owners of such a car will be provided with the opportunity to set a destination address and the vehicle basically will do the rest by driving them there. The top speed disclosed by Google for now is limited to 25 miles per hour.
The company said that it works in collaboration with several automotive partners. For starters, the co-founder Mr. Brin said that Google Inc. has set a goal of manufacturing 100 to 200 test cars. The news comes at a time when there is a campaign aiming to make driverless vehicles more popular in order to make the roads safer.
The design of Google’s driverless cars resembles the one of Fiat 500 or the one of Mercedes-Benz Smart, but it won’t be equipped with a gas pedal, brake, steering wheel and gear shift. The only operations controlled by the driver will be pressing a red “e-stop” button that is intended for panic stops, as well as pressing a start button.
According to one of the analysts working at IHS Automotive – Egil Juliussen – the self-driving vehicles will gain greater popularity over the next twenty years. Mr. Juliussen said that the number of such cars in 2035 is expected to reach 11.8 million, and also projected that almost all cars are to become self-driving by 2050.
Google Inc. was 1.96% up to close at 574.87 dollars per share yesterday, marking a one-year change of +30.34%. According to the information published on CNN Money, the 41 analysts offering 12-month price forecasts for Google Inc. have a median target of 660.00, with a high estimate of 750.00 and a low estimate of 525.00. The median estimate represents a +14.81% increase from the last price of 574.87.

Tuesday, May 27, 2014

Protesters burn vehicles, buildings at New Caledonia nickel mine

 Protesters burn vehicles, buildings at New Caledonia nickel mineRioters torched vehicles, equipment and buildings at Vale's nickel mine in the French Pacific territory of New Caledonia over the weekend, as anger boiled over about a chemical spill in a local river.
The $6 billion Vale plant at Goro in southern New Caledonia was closed earlier this month after some 100,000 liters of acid-tainted effluent leaked, killing about 1,000 fish and sparking renewed protests at the mine site.
The Vale plant has a production target of 60,000 tonnes of nickel at full capacity, compared with global supply of around 2 million tonnes. But it has been beset by problems in recent years, including several chemical spills and violent protests.
Tensions between the local population and Vale escalated over the weekend with young protesters frustrated at the latest spill by the Brazilian-based giant and a lack of response from indigenous Kanak chiefs, according to local media. Television footage showed images of burnt mining vehicles and equipment.
"There was damage at the site, but no damage to the plant. We had burned vehicles, one administration building was damaged, but no damage to the plant itself," Vale spokesman Cory McPhee told Reuters.
Peter Poppinga, an executive director at Vale, told Les Nouvelles Caledoniennes newspaper that damage to the mining site was estimated at least $20 million to $30 million, including the destruction of perhaps one third of the truck fleet.
"If there is no activity for several months, we will shut the plant, but that's not the case. The closing of the plant is not on the table," Poppinga was quoted as saying.
The scale of the damage could not immediately be independently verified.
Nickel mining is a key industry in New Caledonia, which holds as much as a quarter of the world's known reserves. Vale's plant is the second-largest employer in the southern province, with some 3,500 employees and contractors, including a large number of Filipino workers.
New Caledonia's southern provincial government ordered an immediate halt to operations after the spill earlier this month and started legal proceedings under its environmental code.
The local government, which changed leadership last week, said it would not lift the production suspension until safety procedures were revised, an oversight committee was reinstated and an independent expert's report was completed.
"We got to this point because, clearly, part of the local youth, particularly from the southern tribes, reject the perspective of maintaining the plant in activity, even with the reinforcement of safety procedures," Philippe Michel, the newly elected president of New Caledonia's Southern Province, told local television on Monday.
Global nickel prices hit a 27-month high earlier this month and are up by about 40 percent this year, driven by a decision by Indonesia to halt exports of raw nickel ores and news of the Goro closure. Indonesia's ban left nickel buyers in China and Japan scrambling to secure supplies amid a fear of shortages.
"Vale's got lots of issues in the country," said Tom Price, a mining analyst at UBS in Sydney. "Nickel has recovered back to the marginal cost of production. It's inviting for them to continue to invest, but it's been a world of pain for them for quite a few years."
Given market expectations of Goro production of just 15,000-20,000 tonnes this year, any impact on nickel prices from the closure would be sentiment driven, Price added. LME nickel prices rose 0.7 percent to $19,745 a tonne on Tuesday.
The Goro mine produced 4,100 tonnes of nickel in the first quarter, up 41 percent on a year ago. Vale is the world's second-biggest nickel producer, but Goro made up just 6 percent of its nickel output in the first quarter.
The mine employs high pressure technology and acids to leach nickel from abundant tropical laterite ores.
"There is an inherent risk in Goro's type of operation," said Gavin Mudd, a professor of environmental engineering at Monash University in Melbourne.

Monday, May 26, 2014

Buy Aluminium May expiry or accumulate Aluminium mini in June in MCX

Buy Aluminium May expiry or accumulate Aluminium mini in June in MCXAs of Friday 23rd May 2014, 3 month forward LME Aluminum is seen trading at $1818/MT up by 2.70% from its previous close. We had suggested a bullish outlook on the metal in the last week and believe the same scenario may maintain in the next week too. 

There are several reasons for the metal to trade higher and a few prominent factors are as follows: 

A) Global Aluminum stocks which were at record high at 5.492 million tons in the beginning of 2014 has been continuously declining and in May as of now the total stocks stood at 5.233million tons a fall over 5% supporting the prices to rebound from record low since 2013. 

B) Producers are cutting smelting operations after prices declined amid rising costs. Aluminum on the LME fell 13 percent last year and in February touched the lowest since 2009. Oslo-based Norsk Hydro ASA this month said it would permanently close its Kurri Kurri plant in Australia. Earlier this year, Alcoa said it planned to shut a facility in Point Henry, Australia and curb capacity at two smelters in Brazil where producers are reducing output to the lowest in 12 years. 

C) Aluminum premiums are rising in Europe and Japan to a record levels in the recent time also helping the metal to move higher. We believe similar trend may continue in the short term by which prices may remain elevated. European spot aluminium premium rose to a record $390-405/MT, from $370-380/MT a week earlier. Spot ingot premiums in main Japanese port rose to an all-time high of $380-385/MT, up from $365-370/MT previous week. 

D) Aluminum buyers in Japan, Asia’s largest importer, are set to agree on a record fee next quarter as demand rode out a sales-tax gain amid falling global output.

 E) Fees in the U.S. and Europe climbing to a record high as financing transactions and waits to get metal from some LME-tracked warehouses keeping supplies unavailable to users. 

Strategy: Buy Aluminium May expiry or accumulate Aluminium mini in June at Rs. 103 and Rs. 104 respectively for a target of Rs. 107 and Rs. 109 while stop loss should be below Rs. 100 and Rs. 101.

Weekly Economic Data for the week 24-May-14 to 30-May-14

Expected impact on price: This indicator shows the effect of the anticipation of data on the prices of related country’s major indices. We have categorized it as below:
Very Good Good Neutral Bad Very Bad
Actual: Refers to the actual/latest figures after its release.
Data for the week 24-May-14 to 30-May-14
Date Time (IST) Country Data Exp. Prior Exp. chg today Avg. chg of last 1 year Exp. Impact on Price
26-May-2014 05-20 AM Japan Bank of Japan Releases April 30 Meeting Minutes         Neutral
26-May-2014 12-30 PM Japan BOJ Deputy Governor Iwata Speech         Neutral
26-May-2014 05-00 PM European Monetary Union Merkel Holds News Conference in Berlin After EU Election         Neutral
27-31 May-2014 -- Germany Retail Sales (MoM) 0.2% -0.7% 0.90% 1.29 Neutral
27-May-2014 06-00 PM United States US-Durable Goods Orders 0.7% 2.60% -1.90% 6.72 Neutral
27-May-2014 07-30 PM United States Consumer Confidence 83 82.3 0.70 4.00 Neutral
28-May-2014 00-30 AM United Kingdom BOE Governor Mark Carney Speaks in London         Neutral
28-May-2014 01-30 PM European Monetary Union M3 3-month average 1.2% 1.2% 0.00 Neutral
28-May-2014 02-30 PM European Monetary Union EC - Consumer Confidence -7.1 -7.1 0.00 1.04 Neutral
29-May-2014 06-00 PM United States GDP Annualized QoQ 0.5% 0.1% 0.40% 0.45 Neutral
29-May-2014 08-00 PM United States EIA Natural Gas Storage change -- 106 -106.00 33.60 Neutral
29-May-2014 08-30 PM United States EIA Crude Oil Stocks change -- -7.2 7.20 3.45 Neutral
30-May-20134 05-30 PM India Gross Domestic Product Quarterly (YoY) 4.7% 4.7% 0.00% 0.45 Neutral
30-May-2014 05-30 PM Germany Merkel Takes Part in Panel at German Catholic Conference         Neutral
30-May-2014 07-25 PM United States Reuters/Michigan Consumer Sentiment Index 82.5 81.8 0.70 2.48 Neutral