Nifty 7720/7700 or 7570 level

Global Death Cross Accelerates As World Bank Slashes Growth

The World Bank joined the hallowed ranks of the IMF and admitted it was clueless last night, slashing growth estimates for every developed and developing nation from Brazil to the US. The "bumpy start" as they called it merely exacerbated what is now becoming a dismal joke as the death cross of GDP growth expectations and world stock market valuations diverge in an ever more fragile manner.

And this after JPMorgan slashed US expectations...

China construction vs copper price – something's gotta give

Chinese copper imports tumbled 16% in May.

Year to date China is still importing refined copper at a record setting pace – up a whopping 34% over 2013 to 2.1 million tonnes.

This at a time when the Chinese economy is expanding at is slowest pace in more than two decades.

The mismatch is ascribed to the popularity in credit-starved China of the red metal as collateral in trade financing agreements.

But May's sharp drop indicates these deals may be unwinding at a more rapid rate than previously thought.

With all the focus on the unwinding of China's metal-backed loans, it's easy to lose sight of copper's ugly demand fundamentals

As part of its efforts to rein in the country's vast shadow banking system, Beijing has been clamping down on the practice.

At the same time a weakening yuan – another deliberate policy – has pushed many of these arrangements under water.

Last week's revelation that authorities are probing whether traders at the port of Qingdao pledged the same copper, iron ore and aluminum inventories as collateral for loans multiple times to different banks, could turn what has been an orderly exit into a stampede.

With all the focus on the collateralised loan business it is easy to lose sight of the fundamentals of the copper trade.

Unfortunately here the outlook is no rosier.

Capital Economics in a research note points out that construction and infrastructure typically account for nearly 60% of China’s copper usage and while Beijing is providing some support to these sectors through its affordable housing programme and expansion of the electricity grid, "the bigger picture is of weakness in the metals-intensive construction sector."

The close correlation between the copper price and the building sector is clear from this chart.

But early on in 2014 this relationship broke down.

And the most likely scenario of how this link will be restored is not a sudden building boom (Beijing is very wary of any economic stimulus), but a sharp correction in the price of copper.

MCX-Copper – Sell on rallies

The copper futures contract traded on the Multi Commodity Exchange has dropped sharply over 3 per cent in the past week.

Concerns that a private company in China could have pledged copper multiple times as collateral for loans has triggered this fall.

This is adding further pressure to copper that had earlier tumbled after China, the world’s largest consumer of the metal, witnessed its first domestic corporate default in March.

The MCX-copper futures contract has declined below its key short-term support level of ₹404/kg.

The outlook is bearish since the sharp fall in the past week has happened after many failed attempts to break above the 200-week moving average resistance, at ₹420.

Though the contract is reversing higher from the low of ₹394.55 recorded on Monday, the upside could be limited.

Key short-term resistance is available in ₹404-405 zone. Fresh selling interest can emerge in this resistance zone.

Short-term traders can wait for an intermediate rally and initiate fresh short position at ₹403. Stop-loss can be kept at ₹408 for the target of ₹395.

Key support for the contract is at ₹393.

There is a high probability for the MCX-copper contract to reverse higher from the support level ₹393 in the later stage.

WTI Trades Near Three-Month High on U.S. Supplies; Brent Steady

West Texas Intermediate traded near the highest price in three months amid speculation that crude inventories fell for a second week in the U.S., the world’s biggest oil consumer. Brent was steady in London.

Futures were little changed in New York after declining 0.1 percent yesterday. Crude stockpiles probably dropped by 2 million barrels last week to 387.5 million, a Bloomberg News survey shows before Energy Information Administration data today. OPEC nations representing 94 percent of the group’s output said they’re at ease with global supply and demand before a meeting in Vienna to decide on a collective production limit.

“Oil has been boosted by an improved growth outlook in the U.S., but it’s being contained by high supply as we start to work into the driving season,” said Ric Spooner, a chief strategist at CMC Markets in Sydney who predicts investors may sell West Texas contracts if prices rise to about $105 a barrel. “The inventory figures tonight may tell the story on how the market will handle this.”

WTI for July delivery was at $104.50 a barrel in electronic trading on the New York Mercantile Exchange, up 15 cents, at 3:38 p.m. Sydney time. The contract settled at $104.41 on June 9, the highest since March 3. The volume of all futures traded was about 45 percent below the 100-day average. Prices have increased 6.2 percent this year.

Brent for July settlement was up 22 cents at $109.74 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $5.30 to WTI. The spread narrowed for a third day yesterday to close at $5.17.

U.S. Supplies

Crude stockpiles expanded by 1.5 million barrels in the week ended June 6, the industry-funded American Petroleum Institute reported yesterday, according to TradeTheNews.com, a newswire. Supplies were at 399.4 million through April 25, the most since the Energy Department’s statistical arm started publishing weekly data in 1982.

Gasoline inventories shrank by 440,000 barrels, said the API, which collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The EIA report will probably show a gain of 1 million, according to the median estimate in the Bloomberg survey of 11 analysts.

In China, the world’s second-largest oil consumer is hoarding crude at the fastest pace in at least a decade, shielding itself from supply disruptions. Its oil imports are helping drive prices higher, according to Barclays Plc, Citigroup Inc. and Nomura Holdings Inc.

OPEC Meeting

Oil ministers from Angola, Ecuador, Kuwait and Venezuela said they anticipated that the Organization of Petroleum Exporting Countries will maintain its quota at 30 million barrels a day. Saudi Arabia, Libya, Nigeria and the United Arab Emirates said supply and demand are well-matched. Iraq’s minister said there were indications the limit would be retained, while his Iranian counterpart also expected no change.

The 10 nations accounted for about 28.2 million barrels a day of output in May, data compiled by Bloomberg show. Ministers from Algeria and Qatar declined to comment on the market or OPEC’s production yesterday. The group’s first meeting since December will be held today.

Aluminum market to end up in deficit of nearly 1.2 million mt, says Rusal

 Rusal- the world’s leading aluminum producer said Monday that the world aluminum market is likely to report a deficit of nearly 1.2 million mt by end of this year. The company also predicts that aluminum will remain bullish in near term. They further believe that the aluminum prices are currently undervalued.

According to the Russian aluminum major, there is a general conviction among the industry participants and investors that aluminum prices are currently undervalued. The company has become increasingly bullish on the near term prospects for aluminum price.

Rusal also stated that there are very little chances for capacity additions outside China beyond 2015. The global aluminum market is likely to end up in a deficit of nearly 1.2 million mt in 2014. The deficit may lower to 985,000 mt in 2015.

The new capacity additions in China will be offset by the smelters that are idled on non-profitability issues. It notes that the total capacity additions in the country during the first five months of the year totaled 2.4 million mt. However, smelter capacities to the tune of 2.1 million mt were closed during the same period, thus maintaining the balance in production.

The mineral export ban by Indonesia has reduced supplies of bauxite ore to aluminum industry. The Indonesian bauxite shipments to China have fallen drastically during the year from levels of almost 4 million mt in 2013 to just around 4 million mt during the first five months of the current year.

Based on all the above factors, Rusal forecasts the aluminum prices to touch $2,000 per mt in the next few months itself.

2013 Gold Top 10, The Producers

While year after year the list of top gold producers doesn’t change too much, it is always worth knowing which companies are at the top of the gold producer pyramid. So while it is no surprise that the likes of Barrick Gold, Newmont and Anglogold Ashanti top the 2013 gold producer list, it might be interesting to note that last year, newcomer Sibanye Gold slipped into ninth spot… in its first year of production.

The 2013 Gold and Silver Mining Focus report by Metals Focus has been released. Here is the list of 2013 top gold producers.

Barrick Gold (TSX:ABX, NYSE:ABX)

Barrick Gold produced 7.17 million ounces of gold in 2013, down 3 percent from 2012′s level of 7.42 million ounces. The company expects to produce between 6 million and 6.5 million ounces of gold in 2014, according to its 2013 annual report. Barrick had two top-producing mines in 2013: the Cortez and the Goldstrike mines tied with 0.24 million ounces of production each. The company forecasts lower production in 2014 for the Cortez mine and higher production for the Goldstrike mine.

Newmont (TSX:NMC, NYSE:NEM)

Newmont produced 5.07 million ounces of gold in 2013, an increase of 2 percent over last year’s 4.98 million ounces. The bulk of the company’s gold production in 2013 was from Nevada, where Newmont’s Juniper mill is located, as well as its Phoenix, Carlin North Area and Emigrant production sites. The mills had higher tonnage and grades in 2013, and higher leach production also contributed to the production in Nevada, according to the report. Newmont also has projects on other continents, according to its 2013 annual report.

AngloGold Ashanti (NYSE:AU)

AngloGold Ashanti produced 4.11 million ounces of gold in 2013, up 4 percent from its 2012 output of 3.94 million ounces. The company’s largest production comes from continental Africa, specifically from its Geita mine in Tanzania, where 459,000 ounces were produced in 2013. South Africa was the second most productive area for AngloGold Ashanti in 2013, with the Mponeng mine in West Wits the standout production site with 354,000 million ounces of gold. In its 2013 annual report, AngloGold Ashanti estimates it will produce between 4.2 million and 4.5 million ounces of gold in 2014.

Goldcorp (TSX:G, NYSE:GG)

Goldcorp produced 2.67 million ounces of gold in 2013, up 11 percent from 2.4 million ounces last year. The company expects to produce between 3 million and 3.15 million ounces of gold in 2014. Its top-producing mine for 2013 was the Red Lake mine, which produced 493,000 ounces of gold. Red Lake is located in Ontario, and is one of the world’s most productive gold mines, according to the company’s website.

Kinross (TSX:K,NYSE:KGC)

Kinross produced 2.55 million ounces of gold in 2013, up 5 percent from its 2012 level of 2.42 million ounces. The company expects to produce between 2.5 million and 2.7 million ounces of gold in 2014. Its most productive mine was the Kupol mine in Russia, having produced 550,188 ounces of gold in 2013. The Kupol project is in the Chukotka Autonomous Okrug of the Far East Region of the Russian federation.

Newcrest (TSX:NM, ASX:NCM)

Newcrest produced 2.36 million ounces of gold in 2013, up 14 percent from 2.07 million ounces in 2012. For the 2014 financial year, Newcrest expects to produce between 2 and 2.3 million ounces of gold, according to its 2013 annual report. Its most productive mine in 2013 was the Lihir project in Papua New Guinea, which produced 649,340 ounces of gold. According to the company’s annual report, Lihir is one of the largest gold deposits in the world.

Gold Fields (NYSE:GFI)

Gold Fields produced 1.84 million ounces of gold in 2013, a drop of 40 percent from its 3.08 million ounces of production in 2012. Gold Fields’s top producing mine in 2013 was the Cerro Corona mine in Peru, with 314,000 ounces of gold, according to its 2013 annual report. The company also operates in Australasia, South Africa and West Africa. Gold Fields forecasts production in 2014 of around 2.2 million ounces of gold, according to its annual report.

Polyus (LSE:POLG)

Russia-based gold company Polyus produced 1.65 million ounces of gold in 2013, up 5 percent from its 1.57 million ounces of the metal in 2012. Its top producing mine was Olimpiada, with 691,000 ounces of gold produced there in 2013. Olimpiada is in Eastern Siberia, Russia, and is the company’s largest single operation, according to its website.

Sibanye (NYSE:SBGL)

Sibanye produced 1.43 million ounces of gold in 2013, its first year of production. Sibanye was part of Gold Fields until 2013, and if the two companies are combined, their output increased 6 percent year-over-year, according to Moneyweb. Sibanye’s most productive project was the Driefontein operation, southwest of Johannesburg, South Africa. The mine produced a total of 6 million ounces in 2013.

Harmony Gold (NYSE:HMY)

Harmony produced 1.14 million ounces of gold in 2013, down 10 percent from 1.26 million ounces in 2012. The company expects its production will increase to between 1.3 million and 1.4 million ounces of gold in 2014. Its Target 1 mine – located, like all its projects, in South Africa - was most profitable. Mining strikes in South Africa disrupted the company’s profits and production in 2013, but this situation isn’t expected to recur in the year to come.