BNP Paribas Sees Aluminum Creeping Toward Supply Deficit

BNP sees potential for aluminum, long thought of as an oversupplied market, to tip into a supply deficit in the second half of the year. “Aluminum is still stuck with excess production capacity as well as massive surplus inventories,” says the bank. “But strong demand and producer cuts will tip the market into deficit from H2 14, with the shortfall growing in 2015.” BNP Paribas sees world aluminum demand growing 6.5% in 2014. The output cuts expected this year are not likely to make material inroads into excess existing inventories, the bank sees a 2014 deficit of some 750,000 tons. As a result, prices on the London Metal Exchange could approach $2,000 a metric ton by the middle of 2015, BNP Paribas says. As of 10:13 a.m. EDT, three-month aluminum on the LME was trading at $1,765.75 a metric ton.

Gold Sells Off On Yellen's Upbeat Assessment Of U.S. Economy And As Putin Blinks

Some positive remarks on the U.S. economy from Fed Chair Janet Yellen helped push gold prices solidly lower Wednesday. A potential de-escalation in the Russia-Ukraine crisis also weighed on the safe-haven metal.June gold was last down $17.50 at $1,290.00 an ounce. Spot gold was last quoted down $16.70 at $1,291.75. July Comex silver last traded down $0.295 at $19.355 an ounce.

Gold prices were already trading moderately lower in morning dealings Wednesday and then extended losses in the wake of remarks from Yellen to the U.S. Congress. She said the U.S. economy and the economic outlook are generally on the upswing.

Also negative for gold Wednesday are reported comments from Russian President Vladimir Putin that indicated he wants to de-escalate the crisis in Ukraine, including possibly pulling his troops back from the Ukrainian border. Actions speak louder than words and it’s my bias that even though Putin may have seemingly “blinked” Wednesday, this situation is not going to get significantly better any time soon.

The next big economic event for the world market places comes with the European Central Bank monthly monetary policy meeting on Thursday. There is growing pressure on the ECB to implement further monetary policy stimulus measures, amid worries about price deflation in the European Union. The Euro currency is at a multi-week high against the U.S. dollar, and the strength of the common currency is also a concern to many European officials and another reason to EU interest rates.

U.S. economic data released Wednesday included preliminary productivity and costs, the global services PMI, the weekly DOE liquid energy stock report, and consumer installment credit. None of the data had much of an impact on the market place.

The London P.M. gold fixing today was $1,296.00 versus the previous P.M. fixing of $1,306.25.

Technically, June gold futures prices closed nearer the session low and scored a bearish “outside day” down on the daily bar chart Wednesday. Bulls lost their upside near-term technical momentum. Gold bears have the overall near-term technical advantage. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,315.80. Bears’ next near-term downside breakout price objective is closing prices below solid technical support at the April low of $1,268.40. First resistance is seen at $1,300.00 and then at $1,310.00. First support is seen at Wednesday’s low of $1,286.60 and then at $1,280.00.

July silver futures closed nearer the session low and scored a bearish “outside day” down on the daily bar chart. The bears have the solid overall near-term technical advantage. Prices are in a 2.5-month-old downtrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $20.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of $18.685. First resistance is seen at $19.50 and then at Wednesday’s high of $19.77. Next support is seen at $19.25 and then at $19.00. 

July N.Y. copper closed down 250 points at 303.20 cents Wednesday. Prices closed nearer the session low. Bulls and bears are on a level near-term technical playing field. Copper bulls’ next upside breakout objective is pushing and closing prices above solid technical resistance at the April high of 310.45 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 300.00 cents. First resistance is seen at 305.00 cents and then at Wednesday’s high of 306.20 cents. First support is seen at Wednesday’s low of 301.55 cents and then at 300.00 cents

(Kitco News) 

China April trade balance: $ 18.46bn (vs. expected $16.70bn)

Exports:  +0.9% 
expected -3.0%, 
prior was -6.6% 

Imports: +0.8 % 
expected -2.1%, 
prior was -11.3% 

Here is the data from China ... Finally.

Global Aluminum Market to Face 176,000 mt Deficit in 2014: JP Morgan

The latest research note published by JP Morgan predicts that global aluminum market will move into a deficit in 2014, the first time in six years. As per the report, aluminum will report a deficit of 176,000 mt this year. The aluminum producers around the globe are likely to idle more capacities to save costs, which in turn may hurt output.

According to JP Morgan, the Chinese market may witness a surplus of 1.1 million mt this year. The surplus may drop to 0.75 million mt during 2015. The rest of the world excluding China will report a deficit of 1.3 million mt in 2014 and 0.57 million mt in 2015. The global aluminum market will move into a surplus of 183,000 mt in 2015.

The aluminum production is expected to rise in Africa and Middle East. The smelter expansions by Abu Dhabi and Saudi Arabia resulted in aluminum production rising by 14% during the first quarter of the year. However outside China, Africa and the Middle East, production is expected to decline over the year.

JP Morgan forecasts that the US aluminum production will report a deficit of 3.7 million mt, whereas Europe will move into a deficit of 4 million mt. It also expressed fears that nearly one-third of the Chinese smelters face closure risks over the next three years.

China Calls Iran A Strategic Partner And Deepen Defense Ties

On Monday China and Iran agreed to deepen defense ties, according to Chinese state media. The announcement was made following a meeting between Chinese Defense Minister Chang Wanquan and his Iranian counterpart, Hossein Dehqan.

According to Reuters, which quoted a report in Xinhua News Agency, China said that bilateral relations “remained positive and steady, featuring frequent high-level exchanges and deepened political mutual trust.”Reuters also quoted Chang as saying that he is personally “confident that the friendly relations between the two countries as well as the armed forces will be reinforced” as a result of “increased mutual visits and personnel training cooperation between the armed forces.”

According to an Iranian news report, Chang also said that China views Iran as a strategic partner. “Given Iran and China’s common views over many important political-security, regional and international issues, Beijing assumes Tehran as its strategic partner,” Chang was quoted as saying by Fars News Agency, which is viewed as having close ties with Iran’s Revolutionary Guards Corps.

For his part, Dehqan said, “The age-old and historical relations between the two countries which date back to over 2,000 years ago are full of instances of cooperation in cultural, economic, industrial and technological arenas.” He also “voiced the hope that the two countries will continue to play a positive role in safeguarding regional peace and stability,” presumably referring to the Middle East and Central and South Asia.

More specifically, Dehqan was quoted by Fars as saying: “We can remove the two sides’ common security concerns over extremism, terrorism, drug trafficking and piracy by developing military cooperation.”

The meeting took place in Beijing. Dehqan arrived in Beijing on Sunday for a four-day official visit to China at the invitation of Chang. It is his first visit to China since becoming Iran’s defense minister.

In some ways, the announcement today represents something of a shift — and possible weakening — of the defense ties between China and Iran. Since the 1979 revolution severed Tehran’s ties to the U.S. and the Western world, Iran’s defense relationship with China has primarily centered on Beijing selling Tehran advanced defense technologies. As Dan Blumenthal noted in 2005, “Since the mid-1980s, China has sold Iran, in whole or in parts, different variants of anti-ship cruise missiles such as the Silkworm (HY-2), the C-801, and the C-802.” Blumenthal also noted, citing a Jane’s report, that “China is producing several classes of tactical guided missiles – the JJ/TL-6b and 10A, the KJ/TL-10B and a new variant of the C-107 anti-ship missile, specifically for Iran.”

China is also believed to have been integral to Iran’s development of ballistic missiles. Beijing’s assistance was especially crucial in helping Iran with precision guidance and solid-fueled rocket propulsion.

Although in recent years — particularly since the late 1990s — the Chinese government is believed to have scaled back its defense sales to Iran, private Chinese companies have continued assisting the Persian Gulf country. As recently as 2012, the U.S. Director of National Intelligence told Congress, “Chinese entities — primarily private companies and individuals — continue to supply a variety of missile-related items to multiple customers, including recent exports to Iran and Pakistan.” Indeed, the U.S. has repeatedly sanctioned Chinese companies and individuals for selling Iran defense technologies, including just last week.

Chang and Dehqan’s focus on personnel visits in their remarks might simply be a desire on both sides part to publicly downplay arms sales and defense technology transfers. At the same time, it could be a reflection that Iran’s increasingly capable domestic defense industry no longer requires substantial Chinese assistance. In the same vein, Iran is increasingly wary of China’s long-term intentions in its surrounding areas.

Still, Sino-Iranian relations have generally improved since the P5+1 countries and Iran signed an interim agreement last November. China’s oil imports from Iran during the first quarter of this year were up 36 percent from 2013. In a sign of future economic cooperation, last month Zhang Gaoli, a Politburo Standing Committee member and vice premier, met with Iranian Minister of Finance and Economic Affairs Ali Tayyeb-Nia. Tayyeb-Nia was visiting China in a bid to boost economies ties in various areas. He also met with China’s Finance Minister, Lou Jiwei, during the trip.

China is already Iran’s largest trading partner and oil customer. Iran is China’s third largest oil provider.

Jignesh Shah, aide Shreekant Javalgekar held in Rs 5,600-crore NSEL scam

 Jignesh Shah, founder of Financial Technologies (India) Ltd, was today arrested by the Economic Offences Wing (EOW) of Mumbai police for his alleged involvement in the Rs 5600-crore National Spot Exchange Limited (NSEL) scam.

Along with Shah, Shrikant Javalgekar, former CEO of Multi Commodity Exchange of India (MCX), was arrested. His arrest was because of his alleged links with the Indian Bullion Market Association (IBMA), which is a wholly owned subsidiary of NSEL.

Both have been arrested under the Maharashtra Protection of Interest of Depositors Act and they would be held in police custody.

The two high-profile arrests mark an important point in the NSEL payment crisis.

Troubles for the exchange began after it was asked in July last year to suspend spot trade in most of its contracts because of suspected trading violations. It could not settle the outstanding trades, sparking an investigation by the police and regulators. There were 24 members who defaulted payment to about 13,000 investors.

After the crisis came to light, the first high-profile arrest was that of Anjani Sinha, former managing director & CEO of NSEL, by the EOW in October last year. With Shah’s arrest, the total number of arrests in the scam has gone up to 11.

Rajvardhan Sinha, additional commissioner of police, EOW, told reporters here today that both Shah and Javalgekar did not give satisfactory answers during interrogations and that the arrests were necessary to take the investigation to its logical conclusion. “They were not co-operating with us during the investigation and they were evasive. We realised that their custody is important to help in better investigation of the case,’’ he added.

Sinha said the EoW team during investigations found both Shah and Javalgekar were involved in criminal conspiracy. He pointed out that the volume of trades at NSEL were linked with profits of FTIL and that higher trades at the exchange, meant more profits for the parent company. He added that the next course of action by the EOW would be to investigate the role of some of the brokers in the entire crisis.

Sinha said some of the brokerages indulged in malpractices. This included the use of client accounts for unauthorised trades.

The board of FTIL will meet tomorrow to discuss the arrest of its founder and chart a future course of action.

FTIL has been declared unfit by the Forward Markets Commission (FMC) to run an exchange and it has been ordered to pare its stake in MCX to 2 per cent from 26 per cent currently.

Shah’s arrest came on a day FTIL moved the Securities Appellate Tribunal (SAT), challenging a ruling by the Securities and Exchange Board of India (Sebi) which said it was not “fit and proper” to have a stake in any stock exchange.

FTIL will have to divest its entire stake to meet tighter commodity exchange ownership guidelines issued yesterday by the FMC.

On March 19, the market regulator had directed FTIL to divest existing holdings in MCX-SX and four other entities that included National Stock Exchange, Delhi Stock Exchange (DSE), Vadodara Stock Exchange (VSE) and MCX-SX Clearing Corporation (MCX-SX CCL).

Indian Rupee (USD-INR) May 2014

Should Not Close Below 59.95 .

Else Next Target 59.11. Three Consecutive Closes Could Take Currency Further Down To 57.80.