El Nino to Boost Lead Prices in Q3

The El Nino phenomenon will cut refined lead and lead concentrate supply, proffering impetus to lead prices in Q3.

China’s National Climate Center says the impact of the El Nino phenomenon will continue into autumn this year, bringing floods to south China and droughts to north China and some areas of northwest China.

China’s lead concentrate output has been falling this year due to environmental protection efforts and thin profits, and is set for sharper declines due to extreme weather conditions.

“Some major lead concentrate and refine lead producing regions will be affected by the abnormal weather, leading to production cuts, and in turn price hikes.”

Mines in Yunnan, Hunan, Guangxi and Sichuan may curtail production due to strong storms, while dressing operations in Inner Mongolia will be hindered by drought conditions in summer. Data from the National Bureau of Statistics indicate combined lead concentrate output from the five regions mentioned above makes up 68.67% of the national total.

Moreover, smelters in Henan, Inner Mongolia and Shandong which claims about 40% of China’s lead production will witness output declines due to high temperatures. Meanwhile, lead-acid battery market will enter peak season in summer months. The factors will combine to boost China’s lead prices.

“Worldwide, the El Nino will affect lead concentrate output of major producers, such as Australia, US, Peru and India, and the falling supply will garner considerable attention, particularly among speculators,” SMM research team added. Lead concentrate output from these four countries accounts for about 57.28% of the world’s total (excluding China output), according to the International Lead and Zinc Study Group.

S&P Go Short With SL of 2110 For Target Of 2065/2050

S&P One Can Go Short With SL of 2110 For Target Of 2065/2050 n Then a Minor Correction.

Go Short for target of 2023,1992,1968, 1947..... 

Trendline Support @ 2081.

World’s 2nd Biggest Stock Breaks 28-Year Trendline

On March 24, we posted a rare piece on an individual stock. As we do not invest in individual stocks, they are typically not our focus. Therefore, it takes extraordinary circumstances to inspire a post on a single stock. That was the case with the March 24 post which noted the fact that Exxon Mobil (XOM), the world’s 2nd biggest stock, was testing a trendline that began back in 1987.

The origin of the trendline, based on a logarithmic scale of XOM, is the low point of the October 1987 crash. It then precisely connects the 1994 and 2010 lows. Interestingly, the stock stopped on a dime in March once it hit the vicinity of the post-1987 trendline. I say interestingly because, at the time, the stock appeared to be in no-man’s land. There were no obvious support or resistance levels in the vicinity. And yet, the stock stopped right on the trendline. It then proceeded to “walk up” the trendline for the next 18 days.

To those who dismiss the influence of technical analysis and charting techniques on the behavior of stocks as completely random, I can hardly think of a better example of counter-evidence than this. What are the odds that a stock “respecting”, or adhering to, a nearly 3 decade-old trendline is completely random – for 18 days? Furthermore, after bouncing off this trendline into May, XOM returned to it over the past few weeks. It spent 6 straight days sitting squarely (again) on the trendline…before breaking below it yesterday.

This breakdown marks the first day that Exxon Mobil has ever closed below this trendline. Now, assuming the stock’s behavior around the trendline is not completely random, and considering its capacity as the 2nd biggest stock in the equity market, the effect of this breakdown may be profound. Absent an immediate reversal back above the trendline, this loss of 28-year support would appear to open the door to more downside in the stock.

Sourced : By Dana Lyons, partner at Lyons Fund Management and founder of 401kPro.com

Fear of Fall in China Zinc Oxide Consumption Overdone, SMM Sees

The possible delay of new standards for compound rubber will have positive impact on zinc oxide consumption, Shanghai Metals Market foresees.   

China is due to implement new standards for compound rubber on July 1, 2015, but market players speculate that the standards might be carried out later than scheduled.

Dollar knocks gold price back below $1,200

Large scale speculators in gold futures sharply reduced bets on a rising price as the metal is once again rebuffed at the $1,200 an ounce level.

On Monday gold for delivery in August – the most active futures contract – raced out of the gate to reach a day high of $1,205 only to fall back just below Friday's closing price at $1,189.20

Gold has been hovering either side of $1,200 for the best part of three months, but has not been able to break higher, stymied by a strong dollar.

The greenback was trending higher on Monday with the US dollar index reaching a month high against major world currencies.

The dollar is up 21% in value over the past year and is trading near 12-year highs against the yen and multi-year highs against the euro. The euro and the dollar usually move in opposite directions.

As gold retreated further from 3-month highs hit mid-May large investors on the gold futures like hedge funds or so-called "managed money" last week slashed their bullish positions.

In the week to May 26 according to the Commodity Futures Trading Commission's weekly Commitment of Traders data, hedge funds added to short positions – bets that prices are declining – and at the same time slashed their long positions.

On a net basis hedge funds are now long 7.3 million ounces down 16% from last week, nearly 10 million ounces below levels hit in January this year, but still well off the 3.1 million ounces position held mid-March.

Copper submerges below $6000 as global factories sputter

(Reuters) -Copper prices slid back below the $6,000 a tonne mark on Tuesday, after a string of global manufacturing reports revealed only modest demand growth for metals with just one month left of the normally strongest quarter for seasonal demand.

FUNDAMENTALS

* Three-month copper on the London Metal Exchange slipped by 0.4 percent to $5,999 a tonne by 1241 GMT, after closing little changed in the previous session when it plumbed its lowest since April 24 at $5,985 a tonne.

* The most-traded August copper contract on the Shanghai Futures Exchange slipped 0.6 percent to 43570 yuan ($7,029) a tonne.

* Manufacturing activity showed few signs of picking up across Europe, Asia or the Americas in May as demand stayed stubbornly weak, highlighting the need for central banks to continue supporting economic growth.

* The leaders of Germany, France and Greece's international creditor institutions agreed late on Monday to work with "real intensity" in the coming days as they try to clinch a deal in debt negotiations with Athens.

* U.S. consumer spending growth unexpectedly stalled in April as households cut back on purchases of automobiles and continued to boost savings, suggesting the economy was struggling to gain momentum early in the second quarter.

* Mining conflicts in Peru, a top global minerals exporter, will likely heat up ahead of presidential and congressional elections next year as political outsiders whip up anti-mining sentiment, government officials and business leaders said.

($1 = 6.1985 Chinese yuan renminbi)

Oil Prices Drop To 7-Week Lows - Here's Why

WTI Crude hit new 7-week lows, dropping below $57 (front-month) for the first time since April 15th's 'inventory draw' rip. In addition to reports from Reuters of leaked details about OPEC not expectated to cut production (did anyone really expect that), a combination of renewed inventory builds (as reported by API last night) and reports that Iraq is increasing its supply to new record highs is forcing futures prices to catch down to physical markets.

Weakness driven by...Iraq supply concerns...(as RT reports)

Iraq is ready to increase its crude exports to a record 3.75 million barrels per day in June, continuing OPEC’s strategy of ousting US shale producers from the market.

The extra oil from Iraq comes to about 800,000 barrels per day, more than from another OPEC member, Qatar, said Bloomberg, referring to Iraq's oil shipments schedule.

Iraq is increasing oil exports in two directions. The first is in the Shiite south, where companies such as BP and Royal Dutch Shell work. The second is Nothern Iraqi Kurdistan, whose government last year received Baghdad's consent to independent oil deliveries.

In April, Iraq exported almost 3.1 million barrels of oil per day, which is a record.

And Iran remains a worry...

And inventory builds reappear...

And leaked details of OPEC's report suggests no cut in production... (via Reuters)

OPEC is not expected to cut oil production at its meeting in June, and the meeting is expected to be a short one, Saudi Arabia's Al Hayat newspaper quoted an unnamed OPEC source as saying on Thursday.

Saudi Arabia will continue producing oil to meet customer demand, and its output is now at about 10.3 million barrels per day in light of growth in demand from China and India, the source added.

*  *  *

It appears, as we noted here, that futures prices are catching down to the phsyical markets' reality.

Source : www.zerohedge.com