Zinc Prices to Outshine Other Metals in Q1 2015

The price of zinc will perform strongly during Q1 2015 due to favorable market fundamentals, to outshine other metals, Futures Daily said in a research note.  

"Despite the broad sell-off in nonferrous metals market, zinc has held up quite well recently, and zinc will lurch higher once the dollar softens," it foresees.  

China is expected to see a lower growth of zinc output due to tightening ore supply worldwide and acceleration of inefficient capacity elimination in China. Zinc demand in China, reflected by high output of galvanized plate/sheet, is strong. 

Production of galvanized plate/sheet hit a new record high of 4.82 million tonnes in December 2014, thanks to growing consumption in the automobile sector and robust exports.   

Moreover, exchange inventories, both in SHFE and LME, have been falling, which will also give a boost to zinc prices.   

The History Of Global Crises Through The Eyes Of The US Dollar

Which is better: a stronger dollar or a weaker dollar? You decide...

"King Dollar" met Queen Caterpillar this week and awoke the beast of broken narratives that a strong dollar may not be the 'unambiguously good' thing so many proclaim it to be. However, with the rest of the world competitively weakening their currencies (in order to 'help' their economies), we hope the chart above will help readers decide which they prefer... a stronger (US multinational-crushing) dollar or a weak (domestic drag) dollar?

Commexes’ turnover drops 43% to Rs 48.5 lakh cr

Turnover of commodity exchanges fell 43 per cent to Rs 48.54 lakh crore till January 15 this fiscal due to poor participation.

According to the Forward Markets Commission (FMC), these exchanges had generated business worth Rs 85.28 lakh crore between April and January 15 last financial year.

According to the latest data released by the Forward Markets Commission, there was decline in turnover in almost all commodities.

The maximum decline in turnover was reported in bullion, metals, energy and agricultural commodities.

Turnover from bullion fell 54 per cent to Rs 17.17 lakh crore during April-January 15 of this fiscal from Rs 37.39 lakh crore in the year-ago period.

Similarly, the business from base metals like copper declined 39 per cent to Rs 12.48 lakh crore from Rs 20.49 lakh crore, while the turnover from energy items fell 34 per cent to Rs 10.07 lakh crore from Rs 15.14 lakh crore.

Turnover from agriculture commodities dropped 28 per cent to Rs 8.81 lakh crore during the April-January 15 period of this fiscal against Rs 12.25 lakh crore in the same period previous year, the FMC data showed.

Experts said lack of volatility in commodities market and high transaction cost have kept many investors at bay, while the Rs 5,600-crore scam at the commodity spot exchange NSEL has also dented investor confidence.

Currently, there are four national-level and six regional-level commodity exchanges operating in the country.

Zinc and nickel price upside 'imminent': Clarus

There has been a lot of bullish talk in the metals community about zinc and nickel over the past couple of years, as many insiders believe those commodities are poised for a rally. You can include Clarus Securities analyst Mike Bandrowski in that group.

He published a detailed note on Tuesday that suggests zinc and nickel have "imminent" upside and will perform very strongly over the next two years as inventories disappear.

In the case of zinc, Mr. Bandrowski noted the market is already in deficit, and that deficit should get bigger following the closures of the Lisheen and Century mines this year. He said exchange inventories have fallen by more than half over the last two years and should be at "critical" levels later in 2015.

"We believe the lack of funding in zinc mine development and exploration has now caught up with the marketplace and zinc prices will respond in 2015," he said in a note.

"Despite the broad commodity sell-off, zinc has held up quite well, likely an indication of the favourable supply/demand fundamentals."

Nickel has received more attention than zinc due to an Indonesian export ban on raw ore that was imposed a year ago, which removed about 25% to 30% of global nickel supply. The nickel price spiked following the ban, but fell back to earth as inventories dramatically increased.

Mr. Bandrowski's said the inventory spike was partly due to a well-publicized trading scandal in Qingdao, which created disruptions in Chinese nickel stockpiles. He expects inventories to trend lower in early 2015 as Indonesian stockpiles are exhausted in China, and thinks the market is heading toward deficit this year.

"We see a great opportunity for nickel in 2015," he added.

Mr. Bandrowski sees the zinc price rising to US$1.10 a pound this year and US$1.25 in 2016, while nickel is expected to jump to US$11 a pound in 2015 and US$12 in 2016. His top picks among the miners in this space include Lundin Mining Corp., Scorpio Mining Corp, Aldridge Minerals Inc. and Royal Nickel Corp. He also highlighted a few names that he doesn't cover: Talon Metals Corp., Sherritt International Corp., Tinka Resources Ltd. and Goldspike Exploration Inc.

World Bank: Commodities falling like it's 1985

This year may well see a rare occurrence for world commodity markets – a decline in all nine key commodity price indices, says the World Bank’s latest Commodity Markets Outlook, released on Thursday.

Oil prices have seen the most dramatic decline with iron ore a close second, but all commodity categories except beverages and food other than grains, oils and fats were softer last year. This broad-based weakness is expected to continue throughout 2015 says the bank.

Oil enjoyed a rare up day to trade at $47.50 on Thursday after news of the death of the Saudi king, but prices are still down 56% from the most recent high of $108 per barrel in mid-June 2014.

The forecast 3% decline in precious metals will result mainly from waning interest by institutional investors

That's the third largest decline since World War II – previous records of a 7-month decline of 67% were set in 1985–86 and during the global financial crisis in 2008 which saw a 75% drop.

The proximate causes of the steep drop in oil prices, however, have two key similarities with one previous episode according to John Baffes, Senior Economist in the World Bank’s Development Prospects Group:

"Both the current oil price collapse and the one experienced in 1985/86 followed an increase in oil production from unconventional sources and OPEC’s abandonment of price targeting."

The World Bank forecast sees oil prices averaging $53 per barrel in 2015, 45% lower than in 2014. The weakness in oil prices is likely to impact trends in other commodity prices, in particular those of natural gas, fertilizers, and food commodities.

Metal prices are forecast to drop 5.3% in 2015 compared to a 6.6% fall in 2014, while more moderate declines are foreseen for fertilizers and precious metals. A pullback of 2.9% in precious metal prices will result mainly from waning interest by institutional investors.

The moderation in natural gas prices is expected to lead to a 2.1% decrease in fertilizer prices according to the report.

According to the organization next year a recovery in the prices of certain commodities may likely get underway "although the increases will be small compared to the depths already reached."

Copper will reach to $10,000 per tonne, says Simon Hunt

After a small hike, the price of the commodity is expected to decline, it might even slump below 2,000 dollars per tonne by 2017. Simon Hunt, a global copper analyst as well as economist stated that, the price of copper will stabilize in the second quarter of the year, and from the beginning of third quarter, the price of the commodity will start to hike and there is also a chance that the price of the commodity might reach to a record of 10,000 dollars per tonne by the end of 2015 or by the  beginning of 2016, and then the commodity will begin its downward journey again.

He was speaking at the MCC Chamber of Commerce and Industry. He forecast that, the price of copper might decline even lower to 2,000 dollars per tonne by the year 2017. When he was asked about the condition of other metals he stated that, all the other metals are likely to share the similar fate, one way or the other, except for gold .

The value of copper has been declining, and is staying at the present around 5,000-5,500 dollars per tonne. According to the reports, even though the global market is facing a supply glut at the moment, the supply outlook for 2015, has been reduced from 400,000 tonnes to 100,000 tonnes. Hunt expects that, the global market will grow on a smaller pace in the 2015, but he still isn't sure about its effect in India.

S&P Surges As ECB's QE Leaked: Board Proposes €50 Billion In Bond Monetization Per Month

And so with less than 24 hours to go, the ECB has decided to leak its deliberations not only to Merkel and Hollande, but Dow Jones. To wit:

• DJ: ECB EXEC BOARD'S QE PROPOSAL CALLS FOR ROUGHLY EUR50B IN BOND BUYS A MONTH -  SOURCES
• ECB SAID TO PROPOSE QE OF 50 BILLION EUROS A MONTH THROUGH 2016

More as we see it, but if indeed this will be a program without risk-mutualization and conditional and limited burden-sharing, where the hope was that Draghi would "shock and awe" the world with the size of the bond purchasing program instead, €600 billion per year looks decidedly on the low side of any "surprise" announcement where the whisper number was for €1 trillion per year, and if indeed this is the final formulation may result in a substantial disappointment for stocks after the initial kneejerk reaction.

More from the WSJ which broke the news first, and was followed by Bloomberg and Reuters:

A proposal from the European Central Bank’s Frankfurt-based executive board calls for bond purchases of roughly €50 billion ($58 billion) per month that would last for a minimum of one year, according to people familiar with the matter.

The ECB’s executive board met Tuesday to decide on the proposal, which will form the basis of deliberations by the entire 25-member governing council on Thursday. The final number and details could change after the full board weighs in on the plan.

Still, the executive board’s proposal indicates that the ECB could move more aggressively than financial markets have expected. Forecasts among analysts have recently centered on a figure of around €500 billion or higher for a quantitative-easing program, but the executive board’s proposal suggests that bond purchases could amount to at least €600 billion.

An ECB spokesman declined to comment.

The knee-jerk reaction