Japan aluminium stocks rise for tenth month, hit record

* Stocks at 3 key ports grow nearly 9 pct -Marubeni

* Breaks record set in December

Feb 17 (Reuters) - Aluminium stocks held at three major Japanese ports climbed for a tenth month to hit a record high at the end of January, as robust imports met tepid domestic demand.

 

Aluminium stocks held at Yokohama, Nagoya and Osaka grew 8.8 percent in January from a month earlier to 449,800 tonnes, Marubeni Corp said on Tuesday. The trading house collects data from those key ports.

 

That broke the previous record set in December, the highest level in data going back nearly 15 years. 

 

"A high level of imports kept coming to Japan to look for buyers as demand elsewhere in Asia stayed slack and China is exporting cheaper aluminium products to neighbouring countries," said a Tokyo-based trader, who declined to be named.

 

Chinese exports of aluminium products grew about 19 percent last year, a trend analysts expect to continue in 2015 given lower local prices compared with international markets.

 

Meanwhile, Japanese imports of aluminium ingots for 2014 soared 16 percent from a year earlier to 1.698 million tonnes, the highest since 2010, the country's trade data showed. Imports of aluminium alloys rose 11 percent to 1.125 million tonnes, the highest since 2008.

 

January inventories were also inflated by the early arrival of some cargoes that were supposed to arrive in Japan in February, as well as by weak domestic demand, the trader added.

 

Output of rolled-aluminium products by Japanese fabricators fell 2.9 percent in December from a year earlier to 160,731 tonnes, marking a second monthly decline and reflecting slow demand of vehicles and houses, the Japan Aluminium Association said.

 

Japan's aluminium premiums for primary metal shipments it agrees to pay each quarter over the London Metal Exchange (LME) cash price were set at a record high of $425 per tonne for January-March deliveries, rising for a fifth straight quarter as overseas rates remained persistently high.

 

"Spot premiums have been below $425 per tonne in Japan due to higher inventories and as some Japanese companies want to cut their stocks by March 31, the end of the current business year," the trader said.

Confusion over CTT on new agri-commodities cleared

The confusion over commodities transaction tax (CTT) on 38 new agricultural commodities is clear now. The government has neither levied as such any CTT on the trading of any new agricultural commodities nor removed it from the any commodity already covered in the list under CTT. In fact, the Central Board of Direct Taxes (CBDT) has expanded its list of the commodities exempting CTT; a finance ministry official source cleared the confusion. He added, the commodities included in this list will remain out of the ambit of CTT or CTT will not be levied on these commodities.

Previously, the news appeared in the media that the commodities transaction tax (CTT) would be levied on 38 new items of agricultural commodities as the Finance Ministry has expanded the list of agricultural commodities coming under CTT by adding 38 commodities to the existing number of 23. This created confusion in the market.

After including several agricultural commodities in the Non-CTT list, the government has opened a new window for new contracts in the agricultural commodities which exchanges now can initiate.

Commodities included in Non-CTT list  

The new commodities included in the list are rice, bajra, ginger, sesamum, small millets, tur, tur dal, urad, urad dal, onion, groundnut, moong dal, methi, ragi , betelnuts, cinnamon, nutmeg, jowar, linseed, gram daland sunflower seed. Presently, some of the new items added to the list are not traded on commodity exchanges.

Source:Markettimestv

Government exempts oilseeds, raw cotton, 36 other products from commodity transaction tax

The government has added 38 more products to the list of commodities exempt from commodity transaction tax (CTT), raising hopes among commodity exchanges and a section of brokers that the Centre might favourably consider a regulatory recommendation to reduce the levy, if not withdraw it altogether, in the Union Budget. 

Twenty three commodities like oilseeds, raw cotton, spices, etc, were exempt from CTT, introduced in July 2013. The government has exempted 38 more commodities from the levy. Many of these, onion, seedlac, ginger, gram dal, gram husk, masur, methi, safflower, rice, paddy, sesamum, moth, small millets, etc, are either not traded or are illiquid and some like urad and tur have been banned from futures trading. 

However, the move drew praise from leading agri commodity bourse NCDEX and a few brokers. 

"....... it (the development) reflects the growing recognition and confidence in the government that markets are taking a very crucial role in the agricultural economy through our efforts such as developing smart mandis, digital e-procurement platforms for government bodies, warehousing finance at the farmer's doorstep and efficient collateral management," said Samir Shah,MD and CEO, NCDEX. Chirag Shah, head of commodities & global futures, Phillip-Capital, said the move "boosted" sentiment that the government was on the "right track" to grow the nascent commodity futures market. 

The development on February 10 came days after Forward Markets Commission, or FMC, which regulates the 11-year-old commodity futures market, recommended to its parent — the finance ministry —to either withdraw or reduce the levy from the current 0.01% on the seller FMC data show that volume shrank 41% to Rs 101.4 lakh crore in FY14 (Apr 2013 - Mar 2014), the fiscal year the tax was introduced on non-farm and processed farm contracts such as gold, silver, crude oil, cotton, soya oil and sugar. In the fiscal year through January 2015, volume has fallen 42% toRs 51.3 lakh crore from the same period last year. 

Moreover, CTT collection has been significantly lower than from securities transaction tax (STT) on stock market transactions. On MCX, the country's largest commodity exchange with 90% market share, collection in the fiscal year through December was Rs 374.35 crore against Rs 4,940 crore in STT over the same period.

Source : ET

Commodities transaction tax expanded to cover 38 more items

The Finance Ministry has expanded the list of agricultural commodities on which the commodities transaction tax (CTT) is currently levied. As many as 38 items have been added to the existing list of 23 commodities.

For this purpose, the Central Board of Direct Taxes has amended the CTT Rules notified in July 2013. The new items that have been added include rice, bajra, ginger, sesamum, small millets, tur, tur dal, urad, urad dal, onion, groundnut, moong dal, methi, ragi , betelnuts, cinnamon, nutmeg, jowar, linseed, gram daland sunflower seed.

Currently, some of the new items added to the list are not traded on commodity bourses. This CBDT move is significant as it comes a fortnight before the Budget for 2015-16 is to be presented. The Forwards Market Commission – the regulator for commodity futures market in India – had recently suggested to the Finance Ministry that the CTT should be either done away with in the upcoming Budget or the quantum of the levy should be reduced.

The Centre had imposed a 0.01 per cent CTT on primarily non-agricultural commodities from July 2013, resulting in the volume of trade on the commodity exchanges dropping.

According to the Forward Markets Commission's market report, the volume of trade till January during the current fiscal dropped to ₹51.26 lakh crore against ₹89.03 lakh crore during the same period a year ago. The trade value dropped to ₹101.44 lakh crore in the 2013-14 fiscal against ₹170.46 lakh crore in 2012-13.

Source: Business Line

New China credit policy to hit copper imports in Shanghai trade zone

(Reuters) - Trading companies operating in Shanghai's free trade zone are likely to cut back on using copper imports as a financing tool as they are now allowed to borrow from overseas banks more freely, trading sources said.

 

Traders said the reduction would further hit China's imports of copper, which dropped off after Chinese banks tightened credit in the second half of last year amid probes of an alleged metal financing scam. 

 

More than 50 percent of China's refined copper imports in 2012-2013 were linked to financing deals, according to traders.

 

 

The refined copper imports still hit a record in 2014 due to increased term shipments and state purchases, but weak spot buys cut the inflows by more than 9 percent in the second half from the first half. 

 

China's central bank (www.pbc.gov.cn) said on Thursday that companies in the Shanghai free trade zone would now be allowed freer access to financing from abroad.

 

"We used copper trade for transferring funds in and out of Shanghai. Now we don't need copper any more because we can transfer money directly to and from our subsidiary," said an executive at an Asian trading house with a subsidiary operating in the trade zone.

 

The executive said he expected bonded copper stocks in the zone to fall because of fewer financing deals. He declined to be named because he was not authorized to talk to media.

 

Last year's drop-off in China's copper imports in the second-half of the year was a drag on the metal's prices , which fell about a quarter by the end of January from a five-month peak hit in July.

 

Many metal-trading companies moved into the zone looking for a freer trading environment after Beijing started it up in 2013 to try and gradually open the Chinese market.

 

Like importers outside the zone, these traders imported copper, nickel and zinc , storing the metals in bonded warehouses as collateral for cheaper short-term loans from foreign banks.

 

 

U.S. dollar loans from Hong Kong banks are charged annual interest rates of about 1.5-2 percent, compared to more than 5 percent for yuan loans in the domestic market, said the Asian trading house executive.

 

More loans from aboard would cut demand for yuan loans in the China's domestic market, which could force Chinese banks to lower lending rates, said a trader at a state-owned trading company operating in the zone.

Will LME Copper Cheer up during Chinese New Year Like Years Past?

Copper prices on the London Metal Exchange (LME) usually trend up during the Chinese New Year holiday. Will the same occur during the upcoming 2015 Chinese New Year holiday in mid-February?

Analysts interviewed by SMM list the major events that will affect LME copper during the holiday:

US Data and US Dollar Index 

The US dollar index climbed to a more than 11-year high lately. With the US housing starts, PPI, and existing home sales for January to be released during the holiday, the movements of US dollar index will largely influence LME copper prices.

Crude Oil

Crude oil prices experienced intensified volatility. Crude futures rebounded after hitting an over 5-year low on January 29, with LME copper following up. 

Greek Debt Issue

The Greek debt issue may be the greatest uncertainty, as Eurogroup will discuss the conditions for extending bailouts to Greece at the meeting scheduled for 16 February – just before the holiday. And the result from the meeting may magnify market movements. 

Briefing on China Economic Performance 

There will be a briefing on China’s economic performance at the press conference to be held by the State Council Information Office February 20, which may send signals about olicies to be adopted after the holiday. 

“Copper consumption is often the weak around the Chinese New Year holiday, with inventories both at home and aboard set for rises, however, expectation for more stimulus policies may probably offer some support to prices,” an analyst from Minmetals Futures told SMM. 

FMC urges finance ministry to reduce commodity transaction tax

The Forward Markets Commission(FMC) urged the finance ministry to remove or reduce the commodity transaction tax (CTT) in the forthcoming budget because it has severely hit trade volume in the decade-old commodity futures market.

Brokers said the tax of 0.01% on the seller along with lack of volatility has hit futures volume by 40% since it was imposed in July 2013. FMC data show that volume shrank 41% to Rs 101.4 lakh crore in FY14, the fiscal year the tax was introduced on non-farm and processed farm contracts such as gold, silver, crude oil, cotton, soya oil and sugar.

In the fiscal year through January 2015, volume has fallen 42% to Rs 51.3 lakh crore from the same period last year. Moreover, commodity transaction tax collection has been significantly lower than that from securities transaction tax (STT) on stock market transactions.

On MCX, the country's largest commodity exchange with 90% market share, collection in the fiscal year through December was Rs 374.35 crore against Rs 4,940 crore in securities transaction tax over the same period.

"There has been a recommendation to remove or reduce the tax," said a government official. "Introduction of commodity transaction tax has drastically affected volumes and since the commodity futures market is nascent, it's imperative to either wholly remove the tax or to reduce it substantially," said Suresh Nair, director, Admisi Commodities.

The previous UPA government, which introduced the tax at a rate of Rs 10 per Rs 1 lakh on the sell side, justified it on the ground that a huge number of transactions on the commodity futures market did not result in delivery. Officials from leading exchanges such as MCX and NCDEX - specialising in farm and non-farm contracts respectively - argued that physical market constituents used the market to hedge their price risk and not necessarily to give or take delivery.

Further, they pointed out that speculators provided the market with liquidity by taking a contrarian position to that of hedgers. Some of these market participants, who squared off their positions on a daily basis, would be forced out of the market because of commodity transaction tax as the narrow spreads they trade on are being squeezed by the tax.

In the current fiscal year through January, bullion (gold and silver) volumes are down 53% to Rs 18.3 lakh crore, energy by 39% to Rs 13.1 lakh crore and base metals by 32% to Rs 10.6 lakh crore. Bullion accounted for 70% of the overall turnover, followed by energy (26%) and base metals (21%).