Coal Stock Postion @ Various Thermal Power Stations In India

Happy Birthday Lehman Bankruptcy: Silver +71%, Gold +61%, S&P +58%

Three charts... "The West is done, it's over! We screwed it all up. Do you want your great-grandchildren speaking Chinese?"

Market Performance (from the close before Lehman BK) - Silver +71%, Gold +61%, S&P +58%

Federal Reserve Balance Sheet - Plus $3.5 Trillion

And The Recovery? From 62% of the nation employed to less than 59%...

India gold imports rocket 176%

Long the top importer of gold, India fell behind China in 2013.

The decline in gold consumption came after bullion import duties were pushed up tenfold – from 1% at the start of 2012 to 10% – and other rules such as mandatory re-export of 20% of imports, transaction taxes and even curbs on ETF buying stymied India's gold industry.

Business-friendly prime minister Narendra Modi's sweeping victory has raised hopes – since dashed – of relief for the gold industry that employs more than 3 million traders and shopworkers.

Despite most of the curbs on gold imports still in place, official trade data released on Monday shows a 176% rise in gold imports from $739 million to $2 billion during the month of August.

Bloomberg quotes Shubhada Rao, an economist at Yes Bank in Mumbai as saying the big jump should not set off alarm bells over the country's balance of payments:

"We can manage with monthly gold imports of about $2 billion and the jump in the August number is largely due to last year’s low base after a sudden clamp down. The jump may look alarming, but there is no reason for panic."

July, August and September are typically gold's strongest performing months as buying from Asia increases – particularly due to upcoming festivals and wedding season in India.

Despite the huge August import numbers demand – as evidenced by premiums asked by gold traders in India above the London price – does not appear as frenzied as in 2013.

Jewellers and traders are now asking for $5 an ounce over the London price, that's down from a whopping $170 an ounce a year ago when the country's import restrictions really began to bite.

LME copper near 3 month low on China growth jitters

 London copper slipped towards three-month lows on Monday after growth at China's factories stumbled to its weakest in nearly six years in August, fueling concerns over its metals demand.

As well as weakening growth in China's factories, growth in other key sectors also cooled, raising fears the world's second-largest economy may be at risk of a sharp slowdown unless Beijing takes fresh stimulus measures.

"It's going to be a messy day I think," said commodity analyst Daniel Hynes of ANZ in Sydney.

"I suspect the European and U.S. investors will probably take that data a little worse than those in Asia. Their optimism has been quite fragile over the past few weeks, so this will result in a few selling out pretty quick," he added.

Three-month copper on the London Metal Exchange slipped by 0.7 percent to $6,793.75 a tonne by 0146 GMT after closing flat in the previous session.

It earlier fell as far as $6,780.75, towards support at $6,734 a tonne which was the low from Sept. 11 and the weakest since June 20.

The most-traded November copper contract on the Shanghai Futures Exchange fell 0.4 percent to 48,230 yuan ($7,856) a tonne having earlier hit its weakest since June 23.

Losses were cushioned in Asian hours as traders raised bets that China's central bankers will embark on more stimulus to buttress the economy against a property led slowdown.

But further headwinds for commodities were coming from expectations that the U.S. may hike interest rates sooner than previously thought given a string of improving economic signals.

U.S. retail sales rose broadly in August and consumer sentiment hit a 14-month high in September, supporting expectations for sturdy economic growth in the third quarter.

BNP Paribas has shifted its expectations for the first U.S. rate rise to the second quarter of 2015 from the third quarter.

The expectations have weighed on commodities prices because industry will have to pay higher costs to obtain capital and because a stronger dollar makes commodities more expensive for holders of other currencies.

Investors have turned bearish copper. Hedge funds and money managers switched copper into a net short position for the first time since April, the Commodity Futures Trading Commission said on Friday.

Across other metals, more refined zinc is likely to be shipped from bonded warehouses in China to warehouses approved by the LME in Asia in the fourth quarter as tight credit crimps domestic demand, traders said, which is likely to temper a rally in LME zinc.

Three month zinc slipped by 0.2 percent to 2272.25 a tonne but is still up by more than 10 percent this year.

Weak Chinese demand may push zinc stocks to LME warehouses

 

More refined zinc is likely to be shipped from bonded warehouses in China to warehouses approved by the London Metal Exchange in Asia in the fourth quarter as tight credit crimps domestic demand at a time of increased imports, traders said.

 

Higher shipments from China, the world's top consumer and producer of refined zinc, to LME warehouses in Asia could cap LME zinc prices , which have risen more than 10 percent this year.

 

Chinese importers had contracted more refined zinc for term shipments for delivery in 2014 and the bulk was set to be used as collateral for loans, traders said.

 

But tight credit in China has slowed domestic demand this year, weighing on Chinese prices, and traders said that had forced importers to store the metal in bonded warehouses, mostly in Shanghai and the southern province of Guangdong.

 

"If importers are not able to sell the stocks into the domestic market by October ... they may ship to the LME warehouses (in Asia)," said a manager at Shanghai-based firm, which imported zinc for its own consumption and trading.

 

The firm estimated there was more than 100,000 tonnes of refined zinc in bonded warehouses in Shanghai currently, said the manager, who declined to be named because he was not authorised to talk to the media.

 

China's refined zinc imports surged 39 percent to 421,130 tonnes in the first seven months of the year. 

 

Some bonded zinc stocks in Guangdong that have been used in financing deals with foreign banks have already been moved to LME warehouses in Asia after an alleged metals financing scam came to light in early June, traders said.

 

The relocation was requested by foreign banks to secure the metal, even though it was alumina, aluminium and copper stocks in Qingdao port that were involved in the financing scam, they said.

 

A trader who works for an international trading firm said the company would move 1,000 tonnes of bonded zinc stocks from Guangdong to LME warehouses in Malaysia and Singapore in coming weeks.

 

Traders said Chinese banks had been willing to give letters of credit for zinc imports even after the scandal at Qingdao port, although they had tightened checks on the stocks.

"World War III May Have Already Begun", Pope Francis Warns

While we doubt the pope is much of a trader, based on his latest comments, speaking during a visit to Italy's largest military cemetery, where he was commemorating the centenary of World War I and where he said that a "piecemeal" World War III may have already begun, we assume he too would join the confusion of the BIS and every other carbon-based life form, wondering how it is possible that risk assets are at all time highs which the world is not only teetering on the edge of a new global conflict but may have already in fact entered it. Oh wait, the central banks, never mind.

But back to the pope. From BBC:

A "piecemeal" World War III may have already begun with the current spate of crimes, massacres and destruction, Pope Francis has warned.

"War is madness," the Pope said at a memorial to 100,000 Italian soldiers at Redipuglia cemetery near Slovenia. The Argentine Pope has often condemned the idea of war in God's name.

Only last month, Pope Francis said the international community would be justified in using force to stop what he called "unjust aggression" by Islamic State militants, who have killed or displaced thousands of people in Iraq and Syria, including many Christians, the BBC's David Willey reports.

In Saturday's homily, standing at the altar beneath Italy's fascist-era Redipuglia memorial - where 100,000 Italian soldiers killed during WWI are buried, 60,000 of them unnamed, the Pope paid tribute to the victims of all wars.

"Humanity needs to weep, and this is the time to weep," he said. "Even today, after the second failure of another world war, perhaps one can speak of a third war, one fought piecemeal, with crimes, massacres, destruction," he said.

And don't forget S&P500 at all time highs. Because the New Normal, where apparently world war news is the best imaginable news for risk assets.

But while the Pope may be pacifism personified, his grandfather is quote familiar with the concept of world war: he fought in - and survived - Italy's offensive against the Austro-Hungarian empire, in north-east Italy in 1917 and 1918.

That said, we now fully expect futures to open limit up because there is nothing more bullsh for central bank intervention that the world waking up one morning with mushroom clouds all over the place. Just think of all the printing...

China Bad News & Scotland No News Send Futures Lower

While USDJPY is not moving much, no clear news from Scotland (GBP is modestly weaker) and an opposition win in Sweden (Krone weaker) along with China's dismal data (and Securities Journal note that no rate cut is coming anytime soon from the PBOC) sparked some significant selling in US stock futures at the open (-13 points). Treasury futures are modestly higher as S&P future are stabilizing around -7 points for now extending losses from Friday as AUDJPY slides...

US equity futures down notably...

seemingly led by AUDJPY weakness (AUD weakness and JPY unchness) on the back of China data

Charts: bloomberg

Ways to Increase Willpower For Traders. 800th Post of Metal Forex Trader

Pain for gold, silver price as hedge fund slash bullish bets

On Friday the price of gold fell again, reaching an 8-month low after five straight days of selling on the back of negative precious metals sentiment among large investors coupled with a strong dollar.

On the Comex division of the New York Mercantile Exchange in after-hours Friday trade gold for December delivery slid below $1,230 an ounce, a 2.8% retreat for the week to levels last seen early January.

After hitting a high of $1,380 in March, gold's retreat accelerated during the third quarter with a loss of 4.5% so far in September alone. Gains since the start of the year are now less than 3%.

Bullish bets on gold – net long positions held by large investors like hedge funds – fell again last week, while bullish silver positioning all but evaporated.

On a net basis hedge funds hold 71,376 gold lots or 7.1 million ounces, half the year-high of 144,272 while open interest – a measure of market involvement – are hovering near 5-year lows.

So-called managed money now hold a neutral position in silver compared to record net longs of 240 million ounces only a couple of months ago according to Commodity Futures Trading Commission data for the week to September 9 released after the close of business on Friday.

Silver managed slight gains on Friday exchanging hands for $18.62, but still ended the week 3% lower and is not far off levels last seen in July 2010.

Silver has performed against expectations this year with many market observers calling for a rise in the price of the metal thanks to essentially flat mining supply, robust industrial buying which accounts for half overall demand and falling inventories in top consumer China.

This three-year chart of positioning in silver futures and options shows how dramatically speculators' bets on the volatile metal have swung from bullish to bearish in recent months.

China's Lead and Zinc Mines close after heavy rains

Heavy rains in Shaanxi Province, China, have negatively affected production in local lead & zinc mines, Shanghai Metals Market learns.

The impact in Hanzhong is in particularly big, according to SMM sources. There are four lead & zinc mines in Hanzhong, and it is heard that some mines have closed for a week following heavy rains. It remains unknown when production will be resumed.

Lead and Zinc mines in Shaanxi province are mainly distributed in Baoji, Hanzhong and Shangluo. The impact on mines in other two regions is small so far, SMM learns.

India not plan to trim Gold import duty from 10% immediately

It appears that India’s 10% gold import duty, initiated last year, will continue even as an important gold-buying holiday approaches, according to analysts.

The country is not considering an immediate cut in gold import duties despite its trade account deficit narrowing over the past year, according to a Reuters report quoting Trade Minister Nirmala Sitharaman. 

“Since the curb in the gold trade, local merchants and dealers expressed optimism for a possible rollback in these restrictions as India’s current account deficit has narrowed to 1.7% of GDP (gross domestic product) for the quarter ending in June from the all-time high of 4.8% a year earlier,” said HSBC. 

“This news comes at a time when India’s appetite for gold traditionally improves from seasonal demand. Diwali, also known as the festival of lights, is on 23 October and is the largest gold-buying holiday in India,” HSBC added. 

According to INTL FCStone, the import duties have reportedly increased the amount of gold being smuggled into the country. India is important to the gold market as one of the world’s two largest buyers, along with China.

Majority Of Chinese Say War With Japan Is Just A Matter Of Time

When it comes to current geopolitics, one has to stretch their memory to recall a time when there were more overt and not so overt conflicts, humanitarian interventions, drone bombings and proxy or outright civil, and/or otherwise, wars.

But even the escalating cold war (as in European winter cold) between Russia and the west will pale by comparison to what may happen in the far east, if the pent up for generations tensions between China and Japan, which have historically hardly been in a state of "amicable relations", finally spill over into an all out war. Which, incidentally, is precisely what a majority, or 53% of Chinese respondents, and some 29% of their Japanese peers, expect will happen in the coming years.

As the FT reports, the Genron/China Daily survey poll found that "38 per cent of Japanese think war will be avoided, but that marked a nine point drop from 2013. It also found that a record 93 per cent of Japanese have an unfavourable view of their Chinese neighbours, while the number of Chinese who view Japanese unfavourably fell 6 points to 87 per cent."

It is almost as if all that fake pleasantry and courtesy over the past several decades between the two feuding nations was merely to facilitate globalized trade. Trade, which in the new normal is no longer relevant since central banks can just print prosperity in lieu of actual commerce, and which means that the people's underlying feelings can finally bubble to the surface. 

And what's making things worse is that over the past year, both government have made nationalistic sentiment a cornerstone of their domestic and foreign policy (something which a depressionary Europe is quite familiar with):

Jeff Kingston, a Japan expert at Temple University in Philadelphia, said Japanese tabloid media were driving the already negative sentiment towards China by focusing on its “warmongering”. He added that the government was “amplifying the anxiety” by talking about the threat from China.

The poll was released ahead of the second anniversary of Japan’s move to nationalise some of the contested Senkaku Islands in the East China Sea.

Ironically, one of the biggest contributions of Abenomics to Japan's economy may be a massive GDP boost... through war:

Sino-Japanese relations started to improve about a year ago, spurring Tokyo to start laying the groundwork for a possible first meeting between Japanese Prime Minister Shinzo Abe and Chinese President Xi Jinping. But ties deteriorated rapidly again after Mr Abe’s visit in December to Yasukuni, a controversial shrine dedicated to Japan’s war dead including a handful of convicted war criminals.

Mr Abe wants to hold a summit with Mr Xi in November on the sidelines of an Apec summit in Beijing but China has shown no sign of interest. Critics say Mr Abe has hurt efforts to repair ties by visiting Yasukuni and also because of the perception that he is an unrepentant ultranationalist.

This week two members of Mr Abe’s ruling Liberal Democratic party, including a new cabinet minister, were forced to distance themselves from photographs that showed them posing with the leader of a Japanese neo-Nazi party.

“He just replaced the rightwing loonies [in his cabinet] with another group of rightwing loonies,” said Mr Kingston.

As if the world needed more evidence of the intellectual capacity of the people bringing you Abenomics every day. That said, with loonies running the show, something tells us those 53% of Chinese respondents expecting war in the near and not-so-near future, will be 100% right.

BofA Warns "Risk Of Selloff" After September's FOMC

While BofAML's Michael Hanson expects Yellen’s overall tone to remain dovish, market perception will be key. The combination of changes to the forward guidance language, upward drift of the dots, and any comments seen as potentially hawkish, could lead to a selloff...

Via BofAML,

Risk of a hawkish read

The September FOMC meeting may be the most anticipated in nearly a year. We expect no fundamental changes in Fed policy, despite revising the statement to clarify policy data dependence and some upward drift in the dots. The FOMC should taper by another $10bn as well. Fed Chair Janet Yellen’s press conference will set the tone for the market reaction. While we anticipate she will continue to support a patient and gradual normalization process, the risk is that markets may sell off on the perception of a less dovish Fed.

Textual analysis

The FOMC statement has been the focus of much market speculation recently. The “significant underutilization of labor resources” phrase should be retained, in our view, given the soft August jobs report and only slight improvement on net since the July meeting. Conversely the “considerable time” language is likely to revised, in our view, as several Fed officials worry it sounds too much like calendar guidance. To reinforce the data dependent nature of policy, the FOMC could suggest that they will maintain the current 0 to ¼ percent funds rate target range until there has been “considerable progress toward the dual mandate objectives.” We also expect the statement to note that these changes do not reflect a shift in policy preferences, and for Yellen to reiterate that point at the press conference. Still, the risk is that markets see these revisions as a hawkish move in the timing of liftoff.

Drifting dots

The Summary of Economic Projections (SEP) should reveal a slight revision lower for the unemployment rate forecasts for this year and next. We expect a modest upward drift to the 2015 and 2016 dots as well, as some centrist Fed officials have recently shifted to “midyear” from “second half” for their expected start to the tightening cycle. (We just updated our own forecast for the Fed’s first rate hike to June 2015 from September.) The 2017 forecasts will be included for the first time; we look for the median dot to be between 3.25 and 3.50%, with the median ex-hawks at that lower bound. The median longer-run policy rate projection should remain at 3.75%.

Recall that Governor Lael Brainard participates in the SEP for the first time at this meeting.

Market risk also drifts up

Markets are priced well below just about any reasonable variation on the median dot, and a recent San Francisco Fed paper noted that the market seems both too dovish and too certain about Fed policy as well.

Drifting dots thus represent a significant risk for a selloff in the markets. While we expect Yellen to de-emphasize the dots at the press conference  - they are not a consensus policy tool, after all - markets may have difficulty looking past them this time.

*  *  *

Meet the press

Finally, Chair Yellen will likely continue her more balanced discussion of the labor market outlook, yet still emphasize a patient approach to policy normalization. She also may update the discussion around the revised Exit Strategy Principles, but a formal restatement may not appear until later this year. While we expect Yellen’s overall tone to remain dovish, market perception will be key. The combination of changes to the forward guidance language, upward drift of the dots, and any comments seen as potentially hawkish, could lead to a selloff, particularly at the short end of the yield curve.

Oil Price Plunge? It's The Global Economy, Stupid !

The decline in the price of oil - in the face of surging geopolitical pandemonium - has been lauded as indicative of both US' awesomeness in energy independence and a tax cut for Americans... but, as the following chart suggests, there may be another - much more realistic - explanation for why oil is plunging... demand!

World GDP expectations for 2014 just tumbled to their lowest since estimates started...

Maybe - just maybe - that explains the price of oil...

The Philippine ban on nickel spooks out LME

 Since the ban on export in Indonesia, the Philippines have been playing its role regarding the fulfillment of nickel demand in China. The spread of latest news has created a tremendous wave in the nickel market. But relief was bought when the announcement came that the Philippine ban  on exports are many years away from now.

At London Metal Exchange, the benchmark price of nickel declined 1000 dollars to 18,925 dollars on Tuesday; a three month collapses, wiping clean all the profits gained by nickel in the previous days. The market is likely to be overly smug, by the recent lagging in the timeline before even the happening of the unsure Phillipines ore ban, if the whole market is expecting the events in the country to be same as that in Indonesia.

Most probably this is what recent steep offset in the nickel market is all about. Or maybe this can be the reaction of the market towards all the bullish rumors.

Since the market changing ban of Indonesia over unprocessed nickel, the market life of nickel has been going upside down and has been outrun by all other base metals in the market. By issuing the ban Indonesia has cut down about one third of global nickel supply. China and many other countries were in trouble as almost all the producers in the countries provided nickel for stainless steel plants, and their main source of raw material was Indonesia.

Modi Government Gets 43000 Crore by Selling Stake in Coal India ,ONGC ,NHPC.

Kicking off the mega disinvestment drive, government on Wednesday approved the sale of shares in Coal India, ONGC and NHPC to garner a combined Rs 43,000 crore.

"Disinvestment proposals of ONGC, Coal India and NHPC have been cleared by the Cabinet Committee on Economic Affairs," an official source said after a meeting of the CCEA, headed by Prime Minister Narendra Modi.

At current market prices, the sale of shares in state- owned CIL, ONGC and NHPC could garner over Rs 23,000 crore, Rs 18,000 crore and Rs 2,800 crore respectively, helping the government meet its disinvestment target of Rs 43,425 crore for this fiscal.

CCEA has cleared 10 per cent stake dilution in CIL, 5% in ONGC and 11.36% in NHPC through the Offer For Sale (OFS) route, sources said.

The government has already selected merchant bankers for managing ONGC and NHPC disinvestment and is in the process for doing so for CIL.

The previous government had cleared disinvestment in SAIL and according to sources the 5% stake sale in the state-owned steel maker is likely to hit the markets this month.

The sale of 5 per cent stake or about 20.65 crore shares of SAIL at the current market price of around Rs 80.95 a piece would fetch the exchequer over Rs 1,600 crore.

The Cabinet had in July 2012 approved 10.82 per cent stake sale in SAIL. Accordingly, the first tranche of disinvestment of 5.82% was completed in March 2013. The government has missed its disinvestment target for five consecutive financial years.

In 2010-11 and 2011-12 fiscals, the government had raised Rs 22,144 crore and Rs 13,894 crore through disinvestment, against the budgeted target of Rs 40,000 crore in each year.

In 2012-13, it had raised Rs 23,956 crore, as against the target of Rs 30,000 crore. In 2013-14, the government could raise Rs 16,027 crore, as against the budgeted target of Rs 40,000 crore. The target in revised estimates was scaled down to Rs 16,027 crore.

Zinc prices to rise further on falling supply, growing demand

The zinc price in the market is shooting up. According to the investors the price of zinc will continue to run high as some of the giants in the zinc mining industry is running low on supply as the demand increases.

 

Zinc is a vital base metal being used in many industrial activities starting from sunscreens to steel coatings in the car tires.  The problem further increases as this particular base metal has very few substitutes. U.S Mint has initiated to reduce the company’s manufacturing cost, so as to increase the price for their zinc. As for the steel industry, zinc is a vital part of the industry as, the most vital metal used in the rust resistant process of steel making, in that case the steel makers  are the worst affected by this phenomena as they buy about half of the zinc produced in the world.

 

The records show that, since 2007 this is the first time zinc steep this lower than the demand. An American multinational investment banking firm, Goldman Sachs, stated that, many miners would have to face closure as they would find it difficult to locate a new source of the metal with the current pricing. Until 2018 it will be difficult for the miners to cease the demand from industries and coin maker for zinc.

 

A metal strategist of the bank, Stephen Briggs stated that, the large mines all around the would rather soon close down, leaving a very few to replace them, which will be not even that big.

 

Mann Rasmussen, an analyst stated that, there are loads and loads of unrefined zinc available in China, which could be further refined and taken into the market. But at the same time Mr. Chevely of the Investec stated that, the dependence over Chinese zinc supply is unhealthy as the supply wouldn’t even diminish the need in the country alone. 

Nickel Prices Forecasted to Keep Rising

As debate rages in the Philippines about the banning of ore exports, nickel prices have been yo-yoing, with concern fluctuating between panic over stocks and assurances that there is enough of the metal to go around.

Nickel surged back in mid-May from roughly US$8.20 per pound to highs of near $9.50. Since then it has fluctuated, never reaching its initial high; most recently it skyrocketed in August and early September on the back of nickel supply crunch fears.

The metal’s performance is a sharp difference from 2013, when suppliers were struggling with a nickel surplus that left them short on cash.

Looking for help

After Indonesia left the ore export market — the government placed a ban on ore exports in January 2014 — it left large consumers, such as China and Japan, scrambling to identify other sources.

Indonesia’s elimination from the market not only pushed prices sharply upward, but heightened interest in identifying additional supplies.

For its part, China shifted its focus to the Philippines. At the time, Indonesia accounted for 20 percent of global nickel supplies.

According to the World Bureau of Metal Statistics, in December 2013, China imported only half a million tonnes of nickel from Philippines, with 3 million coming from Indonesia.

China, the world’s largest nickel consumer, relies on the ore for use in its steel mills.

A report published in August by Patricia Mohr, Scotiabank’s vice president of economics and commodity market specialist, forecasted nickel prices to keep climbing.

“The world supply & demand balance will shift into a marked ‘deficit’ in 2015, as China depletes its inventory of Indonesian ore for ‘Nickel Pig Iron’ production (used in stainless steel),” she wrote.

Stockpiles growing

Countries are now building stockpiles should the Philippines go through on its threat to ban the export of ore deposits.

Reuters has already reported that China began stockpiling high-grade nickel laterite, known as nickel pig iron , back in May when murmurs of a ban in the Philippines started appearing.

Bloomberg reported that warehouses in Johor, Malaysia, have 157,200 tons of refined nickel, or 49 percent of the LME total, and are 38 percent higher for this year. Total LME nickel stockpiles represent about 1.5 months of solid consumption.

According to the Financial Times, nickel stocks in London Metal Exchange-registered warehouses hit a record of nearly 318,000 tonnes in August, up from 262,000 tonnes at the start of the year and 12 percent since June.

What’s next?

In a report, National Australia Bank said to expect nickel prices to remain steady until stockpile numbers start to dwindle with the ban.

As the single biggest importer of nickel, China seems to remain concerned about any potential ban — judging by its stockpiling of ore.

When Indonesia first placed a ban on exporting ore in an attempt to boost investment in its domestic smelters, nickel prices surged about 35 percent, causing concern over future stockpiles.

However, such rampant concern has been tempered in the past few days, with lawmakers in the Philippines admitting that a potential ban is months away, if not further.

Nickel slides as Philippine supply concern fades

* SocGen advises short Dec. 15 copper on growing supply

* Shanghai zinc tumbles 3 pct as speculators slash long positions

 

- Nickel shed over 5 percent on Tuesday after worries faded about a squeeze on supply from the Philippines, and other metals were knocked by a robust dollar that hit a 14-month high.

 

Three month nickel on the London Metal Exchange ended at $18,925 a tonne, down 5.04 percent and making for the biggest one day price fall since May 15.

 

The metal hit its highest since July 3 at $19,940 on Monday, after a Philippine Congressional committee approved a bill seeking a halt to exports of unprocessed mineral ores.

But the proponent of the bill said in an interview with Reuters on Tuesday that a proposed ban may not be implemented for about seven years

 

The market was jolted in January when top exporter Indonesia implemented a ban on unprocessed ore shipments, sending nickel prices soaring. Nickel is up about 40 percent so far this year.

 

The Philippines is now the top supplier of nickel ore for China's stainless steel industry following the Indonesian ban.

 

"Five or seven years is a very long time. Anything can happen in that time and I would have thought that we will see nickel ease off further," said Stephen Briggs, metals strategist at BNP Paribas in London.

 

 

METALS BROADLY DOWN

 

Selling swept through the LME metals complex, prompted by a strong dollar <.DXY> that hit 14-month highs against a basket of major currencies. A firm dollar makes commodities priced in the U.S. currency more expensive to buyers outside the United States. [USD/]

 

Zinc and nickel were the biggest decliners as investors sold off long positions on the view that prices had got ahead of supply-demand fundamentals.

 

Investors in both metals have been betting that future shortages would boost prices, but supplies are still adequate.

 

"Zinc has moved up a ... long way, and it too has rallied ahead of the fundamentals. It certainly has moved beyond $2,300 rather sooner than I expected," Briggs said.

 

LME zinc ended down 3.6 percent at $2,304 a tonne, and the most-traded November zinc contract on the Shanghai Futures Exchange fell 3 percent before closing slightly off its lows at 16,720 yuan ($2,726).

 

"Open interest has tumbled today, so I believe it's to do with unwinding of previously speculative long positions," said a source at a trade house in Shanghai.

 

LME copper closed at $6,840 a tonne, down 2.15 percent, having hit its lowest since late June at $6,821.75.

 

Societe Generale initiated a short copper position in a note on Monday, citing prospects of rising supply.

 

"We recommend shorting the Dec-15 LME copper contract at current levels above $6,900 per tonne, with a target at $6,500 per tonne or lower," said analyst Mark Keenan of Societe Generale in Singapore.

 

The Shanghai Futures Exchange reopened after a long holiday weekend but Hong Kong was closed on Tuesday.

 

In other metals, aluminium lost 1.38 percent to $2,068 a tonne. Lead fell 3.27 percent to $2,127 a tonne, having hit its lowest since mid-June earlier at $2,124 a tonne, while tin shed 2.11 percent to $20,900 tonne

FMC seeks clarity on Kotak deal with FTIL to buy 15% in MCX

Commodity market regulator says execution date not clear.

Commodity market regulator Forward Markets Commission has sought more clarity from MCX on the Financial Technologies and Kotak Mahindra Bank deal before it can allow the exchange to launch new contracts for the next calendar year.

Agreement ‘conditional’

In a response to an MCX letter seeking permission to launch fresh contracts, the market regulator had said the share purchase agreement signed between Financial Technologies and Kotak Mahindra Bank appears to be conditional.

“The execution of the agreement depends on revision of the technology agreement between MCX and FTIL. The deal lacks clarity with regard to the exact date of its execution and consequently does not inspire adequate confidence and assurance with regard to the proposed acquisition of a 15 per cent stake in MCX,” said FMC.

“Therefore the exchange should clarify as to exactly by what date the disinvestment of the remaining 15 per cent shall be completed,” it said.

Last month, the FMC had cleared the FTIL-Kotak Bank deal but has now sought more clarity so that it can lift the ban on the launch of new contracts by the exchange.

The regulator has also impressed upon the exchange that it has to take corrective measures based on the findings of the Oversight Committee and PricewaterhouseCoopers before permission is sought to launch new contracts.

In response to the FMC’s observations, MCX has clarified that it has written to FTIL seeking the exact date by which the Kotak Bank deal can be executed.

Launch of new contracts

The findings of the Oversight Committee have been addressed and then conveyed to the FMC. The findings will be reviewed by the audit committee this week, said MCX.

On PwC’s findings, the exchange said it has taken action against the erring employees named in the report by filing a police case. The latest status will be reviewed by the oversight committee within a week and updated to FMC, it said.

“We are hopeful that the issues raised by FMC will be addressed by September 30 and FMC approval for the new contract launch will be received,” said MCX.