INSIDE COMMODITIES LME ALUMINIUM-OUTLOOK
Transcription
INSIDE COMMODITIES LME ALUMINIUM-OUTLOOK
INSIDE COMMODITIES Monday, October 13, 2014 LME ALUMINIUM-OUTLOOK MARKETS SNAPSHOT Click on the chart for full-size image Global oil futures lost more than a dollar after Saudi Arabia and Kuwait signalled a willingness to bear with lower prices to defend market share. London copper climbed after Chinese data painted a slightly brighter picture of the world's second largest economy. European stocks were expected to open lower mirroring Asian markets. Wall Street closed negative on Friday. To read more, please click here Contract (AS OF 0614 GMT) Last Change YTD NYMEX light crude $84.78 -1.21% -12.80% NYMEX RBOB gasoline $2.24 -0.78% -18.96% $762.50 -0.16% -19.12% $3.83 -0.67% -8.77% $1,234.25 0.92% 1.50% -9.71% ICE gas oil NYMEX natural gas Spot Gold TOP NEWS Global Economy-China offers hint of growth prospects, Germany expects more bad news LME Copper $6,701 0.84% LME Aluminium $1,936 0.31% 7.22% CBOT Corn $3.36 0.52% -20.85% CBOT Wheat $5.01 0.40% -17.64% R2,175 -0.32% -17.94% Malaysia Palm Oil (Ringgit) (3M) Index (Total Return) Latest Close Change YTD Privately, Saudis tell oil market: get used to lower prices Thomson Reuters/Jefferies CRB 276.2628 -0.29% -1.60% Kuwait says OPEC unlikely to cut output to support S&P GSCI 4291.7169 -0.21% -10.63% Rogers International 3248.18 -0.49% -12.21% Dow Jones - UBS 134.6268 - - Cont Commod Indx 491.3173 -0.46% -3.30% Latest Close Change YTD US STOCKS (DJI) 16544.1 -0.69% -0.20% US DOLLAR INDEX 85.502 0.46% 7.34% US BOND INDEX (DJ) 339.12 0.02% 6.80% prices -Kuna For chart watchers, oil in 'technical graveyard' facing deeper rout U.S. cotton industry accuses Beijing of breaching world trade rules USDA raises record U.S. Corn, soybean crops again Speculators cut cocoa long, shorts in sugar, cotton CFTC Index (Total Return) China copper imports rises 14.7 pct on-month in Sept ECONOMIC WATCH India's JSW steel "very close" to deal for London mining - GMT Source Zambia to change mining tax, lift underground royalty to 8 pct CLICK HERE FOR TECHNICAL CHARTS Indicators Unit Reuters Prior 07:00 SK Core Inflation mm pct 0.1 -0.3 07:00 SK Headline Inflation mm pct 0.1 -0.2 07:00 SK Core Inflation yy pct 0.1 0 07:00 SK Headline Inflation yy pct -0.1 -0.2 23:01 GB BRC Retail Sales yy pct 1 1.3 INSIDE COMMODITIES October 13, 2014 MARKET MONITOR Global oil futures lost more than a dollar after Saudi Arabia and Kuwait signalled a willingness to bear with lower prices to defend market share, although better-than-expected trade data from China pared the losses. Brent crude oil briefly touched Gold prices jumped sharply in Asia as worries over the global economic outlook sent investors scuttling towards safe-haven bullion amid a sell-off in equities and the dollar. Spot gold rose to a high of $1,234.80 an ounce before paring some gains to trade up 0.8 percent at $1,233.15. U.S. gold futures jumped to $1,235.70, their highest since Sept. 23.Silver, platinum and palladium also gained. its lowest at $89.01 in early trade. The dollar fell to a one-month low against the yen, as heightened worries about the health of the global economy continued to shore up the safe-haven Japanese currency. The euro last traded at 136.02 yen up 0.1 percent on the day. The Austra- Chicago corn dropped, stretching its losses into a second straight session after a report from the USDA showed the country's output of the grain was set to exceed the already-forecast record high levels. Chicago Board of Trade front-month lian dollar gained 0.6 percent to $0.8734. corn futures fell 0.3 percent to $3.33 a bushel. London copper climbed after Chinese data painted a slightly brighter picture of the world's second largest economy. Three- European stocks were expected to open lower mirroring Asian markets with concerns about faltering global economic growth weighing on equity markets across the world. Wall street closed negative on Friday. month copper on the London Metal Exchange climbed 0.7 percent to $6,691 a tonne. The most-traded December copper contract on the Shanghai Futures Exchange rose 0.4 percent to 47,790 yuan($7,802) a tonne. TOP NEWS Privately, Saudis tell oil market: get used to lower prices Global Economy-China offers hint of growth prospects, Germany expects more bad news Saudi Arabia is quietly telling oil market participants that Riyadh is comfortable with markedly lower oil prices for an extended period, a sharp shift in policy that may be aimed at slowing the expansion of rival producers including those in the U.S. shale patch. Some OPEC members including Venezuela are clamoring for urgent production cuts to push global oil prices back up above $100 a barrel. But Saudi officials have telegraphed a different message in private meetings with oil market investors and analysts recently: the kingdom, OPEC’s largest producer, is ready to accept oil prices below $90 per barrel, and perhaps down to $80, for as long as a ye`r or two, according to people who have been briefed on the recent conversations. The discussions, some of which took place in New York over the past week, offer the clearest sign yet that the kingdom is setting aside its longstanding de facto strategy of holding prices at around $100 a barrel for Brent crude in favor of retaining market share in years to come. The Saudis now appear to be betting that a period of lower prices – which could strain the finances of some members of the Organization of the Petroleum Exporting Countries – will be necessary to pave the way for higher revenue in the medium term, by curbing new investment and further increases in supply from places like the U.S. shale patch or ultra-deepwater, according to the sources, who declined to be identified due to the private nature of the discussions. The conversations with Saudi officials did not offer any specific guidance on whether - or by how much - the kingdom might agree to cut output, a move many analysts are expecting in order to shore up a global market that is producing substantially more crude than it can consume. Saudi pumps around a third of OPEC’s oil, or some 9.7 million barrels a day. China's economy, the second largest in the world, gets a spot check this week with a barrage of data due that should indicate how successful Beijing has been in supporting growth. It may be even more pertinent than usual, given that the Federal Reserve has been surprisingly cautious about the U.S. economy and with euro zone powerhouse Germany suddenly appearing to stagger. The world economy may not be on the brink of falling back into recession, but it is hardly on fire. The International Monetary Fund, for example, has lowered its growth expectations for this year and next in Europe, Japan and China, among others. Since April, Beijing has taken steps to keep up growth, including cutting reserve requirements for selected banks and hastening construction of railways and public housing. Some of this week's Chinese data - inflation, trade, bank credit, money supply and FX reserves - will pave the way for third quarter gross domestic product numbers on October 21. Annual GDP growth quickened slightly to 7.5 percent in the second quarter from 7.4 percent in the previous three months, but the economy was losing steam going into the third quarter as the property market slowed. Analysts at UBS are expecting a mixed picture, with better export numbers offset by weaker import numbers, softer inflation and modestly slower credit growth. That points to continuing slack domestic demand with year-onyear GDP easing back some more. UBS is expecting growth of 7.1 percent, while HSBC has pencilled in 7.3 percent. Either number would signal the slowest year-on-year expansion in China since the first quarter of 2009 and the fourth quarter of 2001 before that. 2 INSIDE COMMODITIES October 13, 2014 TOP NEWS (Continued) Kuwait says OPEC unlikely to cut output to support prices Kuna For chart watchers, oil in 'technical graveyard' facing deeper rout OPEC is unlikely to cut oil production in an effort to prop up prices because such a move would not necessarily be effective, Kuwait's oil minister Ali al-Omair was quoted as saying by state news agency KUNA on Sunday. Brent crude oil settled at $90.21 a barrel on Friday after earlier falling to $88.11, the lowest since December 2010, as Saudi Arabia said it raised production last month, adding to perceptions that the kingdom is looking to defend market share, rather than prices. Oil ministers from the Organization of the Petroleum Exporting Countries (OPEC) are scheduled to meet in Vienna on Nov. 27 to consider whether to adjust their output target of 30 million barrels per day (bpd) for early 2015. "I don't think today there is a chance that (OPEC) countries would reduce their production, especially since the target that OPEC has given itself is 30 million bpd, which we have not reached until now," Omair said, according to KUNA. World oil prices are on the brink of sliding another $10 or more, according to chart analysts who say the over 20 percent drop since June has wiped out key support levels and left behind a "technical graveyard". On Friday, Brent crude dropped to its lowest level in nearly four years before ending near flat at $90.21 a barrel. A combination of unrelenting supply from the U.S. shale oil boom and disappointing demand from Europe and China has walloped markets, with Saudi Arabia reluctant to curtain output. According to analysts who use historical chart patterns to anticipate price movements, the worst may not be over. On a weekly chart, Brent futures had earlier closed in on $88.49 a barrel - the pivot support level representing a 76.4 percent Fibonacci retracement of their most recent high and low from February to June of 2012. U.S. cotton industry accuses Beijing of breaching world trade rules U.S. corn and soybean production in 2014 will be even higher than the record forecast a month ago, but somewhat below market expectations, U.S. Department of Agriculture data showed on Friday. The USDA made surprise cuts to U.S. and global wheat ending stocks for 2014/15, pushing wheat futures up 1.2 percent, while corn fell 2.5 percent and soybeans eased 1 percent. Domestic wheat stocks at 654 million bushels reflected higher projected exports and feed usage. At 14.475 billion bushels, the U.S. corn crop marginally trailed average estimates, as did projected yields and harvested acreage. "It's not 'bullish,' it's just 'not bearish.' The USDA did make modest reductions in harvested area, and they didn’t ramp up the yields as much as expected," said Charlie Sernatinger of ED&F Man Capital. USDA raises record U.S. Corn, soybean crops again Beijing's cotton price supports have breached global trade rules, a U.S. industry association said, calling on U.S. regulators to examine China's support levels in a sign of mounting tensions between the world's top grower and the global market. Prices paid to farmers by the Chinese government under the country's farming policy exceed those allowed by the World Trade Organization, the National Cotton Council (NCC) of America said in a testimony to the U.S. Trade Representative on Oct. 1. "An evaluation of recent policies suggests that China is far exceeding" its commitments under the WTO protocol, said Wally Darneille, NCC chairman and president and chief executive officer of Plains Cotton Cooperative Association, one of largest U.S. grower cooperatives and marketers. The NCC has estimated that Beijing's support has exceeded the allowed level of 8.5 percent of the country's crop production value for the past four years. It represented 29 percent of production value in 2014, and exceeded 30 percent in both 2012 and 2013, according to NCC estimates. China copper imports rises 14.7 pct on-month in Sept China's copper imports surged 14.7 percent from the previous month in September, hitting a 5-month high, after importers increased term shipments on an expected rise in seasonal demand. Arrivals of anode, refined copper, alloy and semi-finished copper products reached 390,000 tonnes in September, up from a 16-month low at 340,000 tonnes in August, data from the General Administration of Customs showed on Monday. The monthly imports were down 14.8 percent from a year earlier, but in the first nine months, inflows rose 10.5 percent onyear to 3.59 million tonnes. September arrivals were higher than expected, with term shipments rising because factories expected seasonal demand to start from October, said Zhou Jie, a trading manager at China International Futures (Shanghai). Speculators cut cocoa long, shorts in sugar, cotton -CFTC Speculators cut their net long position in cocoa futures and options to a four-month low and cut bearish bets in sugar and cotton in the week ended Oct. 7, U.S. Commodity Futures Trading Commission data showed on Friday. The data also showed speculators increased their net long position in arabica coffee on ICE Futures U.S. In cocoa, noncommercial dealers cut their bullish stance by 14,694 contracts, their most in at least a year, taking the total to 53,871 contracts. That was the lowest level since early June, coming as futures prices fell from multi-year highs as fears of Ebola spreading to top-producer Ivory Coast subsided. 3 INSIDE COMMODITIES October 13, 2014 TOP NEWS (Continued) India's JSW steel "very close" to deal for London mining Source Zambia to change mining tax, lift underground royalty to 8 pct India's third-largest steelmaker, JSW Steel Ltd, is nearing a deal to buy embattled West African iron ore miner London Mining Plc, a source with direct knowledge of the negotiations told Reuters. Trading in London Mining's shares, which have lost almost all of their value this week, was halted on Friday afternoon. "JSW is very close to a deal. It is almost 100 percent done," the source said. JSW could not be reached for comment. London Mining, which owns the Marampa mine in Sierra Leone, has been battling high costs, a sharp drop in iron ore prices and the impact of the Ebola virus on the region. The company warned last week that it did not have enough cash to operate its only mine and that it was in talks about a potential "strategic investment". Zambia will increase underground mining royalties to 8 percent from 6 percent as part of an effort to revamp the industry's tax system, Finance Minister Alexander Chikwanda said in his 2015 budget speech on Friday. The new system he outlined aims to collect revenue from the industry at different stages of the production pipeline by introducing a 30 percent corporate processing and smelting tax. Another 30 percent tax will be applied to income earned from "tolling", industry-speak for an agreement to process another producers raw materials. Open cast mining operations in the southern African nation will now be subjected to a "20 percent mineral royalty ... as a final tax," Chikwanda said. 4 INSIDE COMMODITIES October 13, 2014 3 month TECHNICAL CHARTS (12 and 50 days Exponential Moving Average) Click on the chart for full-size image NYMEX Crude ICE BRENT Crude Spot Gold Spot Silver CBOT Corn CBOT Wheat (Inside Commodities is compiled by Atiqul Habib in Bangalore) For more information: Learn more about our products and services for commodities professionals, click here Contact your local Thomson Reuters office, click here For questions and comments on Inside Commodities click here Your subscription: To find out more and register for our free commodities newsletters click here © 2014 Thomson Reuters. All rights reserved. This content is the intellectual property of Thomson Reuters and its affiliates. 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