Rusal to keep production volumes low despite high aluminum prices

 Russian-UC Rusal- the world’s largest aluminum company has announced to keep its production below capacities during the rest of the year, despite rising aluminum prices. The company plans to restrict its cumulative aluminum output to 1.8 million mt during July-December period this year. The mills will run at less than 80% of their capacities, Rusal announced.

The company expects aluminum prices to remain positive in the second half of the year. The premiums are also likely to improve. However, Rusal notes that world aluminum producers are seen unwilling to boost production due to several cost factors including power tariff hikes, labour issues and raw material costs. The company plans to persist with the cost-effective production controls. It had implemented a series of production cuts at high cost smelters during the first half of 2014.

The company announced that it will stay away from restarting idled capacities or expanding current facilities. The launch of Boguchansky smelter too is delayed, the company stated.

According to data, primary aluminum ingot, billet, slab and foundry alloys production by Rusal during H1 2014 had totaled 1.7 million mt, down almost 11% when compared with the corresponding six-month period in 2013. The company estimates the full year production for 2014 to reach 3.5 million mt, down nearly 9% when compared with the annual production of 3.5 million mt in 2013.

Aluminum Warehousing Antitrust Suits Dismissed by Judge

Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM), Glencore Plc (GLEN)and other firms won dismissal of lawsuits accusing them of restricting aluminum supplies in a conspiracy to drive up prices.

U.S. District Judge Katherine B. Forrest today threw out the antitrust claims by buyers of aluminum and aluminum products, finding they hadn’t shown the defendants acted together to increase prices.

The complaints filed by the aluminum purchasers showed that “this was an unintended consequence of rational profit maximizing behavior rather than the product of conspiratorial design,” Forrest said in her written opinion.

Forrest also ruled that a group of commercial and consumer end-users of aluminum lacked the legal standing to make their antitrust claims, saying they can’t refile them. She gave the other plaintiffs in the case permission to try to file new complaints.

Today’s ruling doesn’t affect a group of antitrust claims targeting alleged price-fixing in the gold and silver markets. In those cases, plaintiffs claim banks manipulated a benchmark used to set prices throughout the gold and silver markets.

Dozens of makers of porch screens, flashlights and other products that contain aluminum sued beginning in August 2013 over claims the metal was being hoarded in Detroit-area warehouses, triggering delays of as long as 16 months in filling orders. Forrest said today that price increases were the unintended result of traders and warehouses trying to maximize their own profits.

Forrest dismissed claims this week against the London Metal Exchange on the ground that it functions as an arm of the U.K. government and is protected by sovereign immunity.

bloomberg.com

Nifty August Series Expiry view

• Nifty  has done nothing from past 6 trading session and closing in range of 7875-7936. Series of Dojis around new high suggesting market participants are confused on next move.Also we have rising wedge forming on daily chart and most of market participants looking to see 8000 on Index . Will market oblige ?

• Nifty Future Aug Open Interest Volume is at 88.5 lakh with liquidation of 16  lakh suggesting long liquidation and 42 lakh got rollovered to September series.VIX being very low suggests bulls are still overconfident and every dip is getting bought into.
  

• Total Future & Option trading volume was   at 2.83  lakh core with total contract traded at 2.2  lakh. PCR @1.02

• 8000  CE  OI at 1.04 Core  suggesting wall of resistance , 7800 CE  liquidated 5.3 lakh  suggesting bears cutting down positions  . 7900 CE liquidated 6.7 lakh suggesting bulls are making support on 7900 . FII’s bought 7.8 K CE longs and 21.7 K  CE were shorted  by   them. FII are shorting 7900/7800 CE, so is this an indication of expiry below 7900 ?
  

• 7900 PE OI@ 59.5 lakhs so strong base @ 7900 .FII’s bought 8.7  K contract  PE longs and 5.2 K shorted PE were covered  by them.

• FII’s bought 290  cores in Equity and DII bought 237 cores in cash segment.INR closed at 60.43.FII’s have bought 3.3 K cores and DII’s

• Nifty Futures Trend Deciding level is 7934 (For Intraday Traders). NF Trend Changer Level (Positional Traders) 7778 and BNF Trend Changer Level (Positional Traders) 15340 .

Buy above 7950 Tgt 7963,7980 and 8000 (Nifty Spot Levels)

Sell below 7933 Tgt 7919, 7902 and 7880 (Nifty Spot Levels)

Upper End of Expiry:7988      Lower End of Expiry:7879

Forget Geopolitical De-Escalation - Here's The Real Reason Why Oil Is Tumbling

As with  every other asset-class in the world now, fundamentals have taken a very distant back-seat to both liquidity (flow) and positioning (technicals) as traders are increasingly (in one way or another) on the same side of the same trade. Mainstream media will proclaim US energy "independence", US sanctions 'winning' over Putin, or US airstrikes 'calming' down Middle East uncertainty; but the real reason oil is plunging is... the biggest mass liquidation of speculative longs in recorded 30 year history over the last few weeks...

Obviously speculators remain massively - unprecedentedly long oil futures still...

MCX-Lead (₹136.9): BUY

The price of the metal lead, which finds its major usage in batteries, has risen sharply since May. The lead futures contract traded on the Multi Commodity Exchange (MCX) has surged 10 per cent from ₹123/kg in May to ₹137 now.

According to the data from the International Lead and Zinc Study Group (ILZSG), the market for lead ran into a deficit in 2013 for the first time in the last few years. The deficit is expected to widen in 2014 to 50,000 tonnes from a deficit of 1,000 tonnes in the previous year. Slow-down in mine production, increase in demand and widening deficit could limit any fall in the lead price and keep the current up trend intact. This provides a good opportunity for both the short- and medium-term traders to go long in the MCX-lead futures contract.

Short-term view: The short-term outlook is bullish. The fall from the high of ₹140.75 recorded on August 5 found support at ₹133.5, the 38.2 per cent Fibonacci retracement level. The contract has reversed higher from this level thereby reversing the downtrend. Resistance is at ₹139. A strong break above this level can take the contract higher to ₹142.

Traders with a short-term perspective can initiate fresh long position now. Stop-loss can be placed at ₹134 for the target of ₹141.

Immediate support for the contract is at ₹135 and then the key short-term support is at ₹133.5. The outlook will turn bearish only on a strong break below ₹133.5. Such a break can take the contract lower to ₹130 in the short-term.

Medium-term view: The medium-term outlook is also bullish for the MCX-lead futures contract. The recent rally since June has decisively reversed the strong downtrend that was in place since the August 2013 high of ₹155.4. Also this reversal has happened upon forming a double bottom reversal pattern. The neckline support of this pattern is at ₹130. As long as the contract trades above this level, a rally to ₹148 looks likely in the medium-term.

Traders with a medium-term perspective can hold the long position with a wide stop-loss at ₹129 for the target of ₹147. Intermediate declines to ₹134 and ₹130 if seen can be considered for accumulating more long positions.

The medium-term outlook will turn bearish if MCX lead futures contract declines below ₹130. The ensuing target will be ₹120.

Business Line

Aluminum Trades Near 18-Month High as U.S. Outlook Improves

Aluminum traded near an 18-month high on speculation demand is rising amid signs a recovery is gathering pace in the U.S. and before data forecast to show the country’s economy expanded for the second quarter.

The metal in London was little changed after rising 1 percent yesterday. The U.S. economy grew 3.9 percent in the three months through June, according to a Bloomberg survey of economists before government data tomorrow. Orders for goods meant to last at least three years climbed by a record 22.6 percent in July, the Commerce Department said yesterday. Consumer confidence unexpectedly rose in August to the highest level in almost seven years, a separate index showed.

Aluminum for delivery in three months on the London Metal Exchange was at $2,084 a metric ton, up 0.1 percent, at 8:38 a.m. in Hong Kong. It closed at $2,083 yesterday, the highest since February 2013. Also on the LME, nickel fell while copper was little changed. Lead, zinc and tin price unchanged .

Russia's Rusal back in black as aluminium market moves into deficit

* Q2 recurring net profit climbs to $129 mln

* Core earnings jump 26 pct but miss forecasts

* Rusal sees aluminium market moving into deficit

* Rusal shares up 73 pct this year (Adds CEO comments)

MELBOURNE, Aug 27 (Reuters) - Russia's United Company Rusal Plc returned to profit in the three months to June for the first time in five quarters due to higher aluminium prices, cost cuts and smelter closures, and forecast further gains.

The aluminium giant, which last week completed a restructuring of $5.15 billion in debt and has no payments due until January 2016, said it expects its margins and profits to improve in the second half of the year.

"In the first half of 2014, we witnessed some important trends which signaled that the global aluminium industry has turned a corner," Chief Executive Oleg Deripaska said in a statement on Wednesday.

Aluminium prices have jumped 24 percent off a 4-1/2-year low hit in February. Global demand increased by 6 percent to 27 million tonnes in the first half of this year, while producers outside China have cut output, Deripaska said.

Premiums that aluminium buyers pay over London Metal Exchange prices have also increased to record levels this year, with Rusal seeking a premium of $460 per tonne for shipments to Japan in the December quarter, three sources told Reuters ahead of quarterly price talks.  

For the September quarter, Japanese buyers mostly agreed to pay a record premium of $400-408 a tonne PREM-ALUM-JP.

Rusal's recurring net profit, defined as adjusted net profit plus the company's share of Norilsk Nickel's earnings, jumped to $129 million for the June quarter, up from a loss of $203 million a year earlier.

Core earnings jumped 26 percent to $220 million, but that missed analysts' forecasts for earnings before interest, tax, depreciation and amortisation (EBITDA) of $255 million, according to a Reuters poll of six brokers.

Rusal, which has a primary listing in Hong Kong and secondary listings in Paris and Moscow, said it expected EBITDA to top $600 million in the second half of this year at current aluminium prices.

"Looking at the rest of the year, we expect the LME spot aluminium price to remain around its current level and view potential upside for physical premiums," Deripaska said.

Rusal said it expected a global supply deficit of 1.5 million tonnes in the global aluminium market this year.

Rusal's shares have surged 73 percent this year on the back of the rebound in aluminium prices and a sharp jump in nickel prices. Rusal owns a 28 percent stake in Russia's Norilsk Nickel.