[Base Metal] Base Metals Daily Report 04 August,2015 - Emkay Commotrade-Shanghai Metals Market

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[Base Metal] Base Metals Daily Report 04 August,2015 - Emkay Commotrade

Industry News 03:07:13PM Aug 05, 2015 Source:SMM

By  Paul Ploumis 05 Aug 2015  Last updated at  03:21:06 GMT

According to the LME’s Commitments of Traders Report (COTR), Money managers reduced slightly their net short position in the week ending July 26 - short-covering at 14559 lots was countered by substantial long liquidation of 8419 lots. The fund position was net short for the third consecutive weeks.

Overview

•The Australian dollar jumped from record low levels after the Reserve Bank of Australia left interest rates unchanged at a policy meeting

•The Shanghai composite index up 3.69 percent after the country's authorities stepped up their efforts to curb short selling to halt a rout

•A stronger dollar on Fed imminent rate liftoff estimates, signs of China weaknesses and oversupply worries weighed down demand for industrial metals in the globe

•Raw materials index has slumped 11 percent in 2015 amid expanding gluts and concern slower economic growth in China will crimp demand and dollar Spot Index is up 2.4 percent this month


Bullish factors

Bearish factors

  • Copper production problems in Zambia and Chile tempered those worries 

  • Chinese domestic production of primary aluminum of a record 2.76 million tonnes in June was up 3.3 percent from May 

  • US vehicle sales were particularly strong in July - annualized sales of 17.6 million units (mu) compares with 17.2 mu in June. 

  • Chinese domestic production of refined copper of 695,121 tonnes in June was up 13.1 percent from last yea 

       •China lead acid batteries exports rises in June at 17920 T.
  • Nickel retreated 1.6 percent to $12,745 a ton in London. Aluminum and tin also fell more than 1%. –INSG 

  • INSG sees world primary nickel production falling around 1.5 percent to 1.96 million tonnes in 2015, the same level as 2013, and expecting demand to increase 3.74 percent to 1.94 million tonnes this year. 

  • ILZSG and WBMS data showing that Lead supply and demand are all but balanced - there was a 7,000-tonne surplus in January-May 

  • ILZSG figures for May showed that zinc market flipped into a supply deficit of some 34,000 tonnes. 

  • The Shanghai Composite has crumbled more than 30 percent from its mid-June peak and China’s Yuan hit a four-month low against the U.S. dollar 

 LME Commitment of Traders Report

According to the LME’s Commitments of Traders Report (COTR), Money managers reduced slightly their net short position in the week ending July 26 - short-covering at 14559 lots was countered by substantial long liquidation of 8419 lots. The fund position was net short for the third consecutive weeks. Over the week from July 26- July 19, copper net long money managers positions fell by 8419 lots last week to 1,28335 lots. The decline in the net length was driven by 8,419 lots of long liquidation and 14559 lots of short-covering. Overall net position short by 6,140 lots the potential for short-covering to be triggered should the metal fail to hold onto its losses remains. Outstanding interest in the same period decreased by 41677 lots to 409361 lots. From the current chart and table we can conclude that market bets moved on both the sides in last week as china slump liquidated the longs on weak sentiments while short moves out on fear of reversal on oversold prices. The net short positions increased in last week showing weaknesses in the prices. 

Copper

Total OI

Shorts

Longs

Net

26/06/2015451038-145468136754-8714
03/07/2015409361-130909128335-2574
Change-4167714559-84196140

Spread Analysis

Copper spreads on the London Metal Exchange (LME) entering into backwardation from deep contango. Copper Cash to three months spread has eased significantly from the July average of $15.41 - it was last at $8.50. Lead cash to three months spread has eased significantly from the July average of $12.91 - it was last at $7.00. This highlights the increased potential for short-covering. For aluminum prices, the contango has started to tighten of late, with the cash-threes spread currently at $35.25, down from $40.00 last week but still sharply up from the start of May. The benchmark cash-to-three-months part of the LME forward curve closed in last week of June valued at $31-per tonne contango, that’s the lowest cash premium since the fourth quarter of last year. 


Stock Analysis

LME copper stocks surged over the first couple of months of 2015, peaking at 346,525 tonnes in July. LME Copper stocks increased at a faster pace in July; the decline from mid- March seems to have been undermined, exerting downward pressure on spot prices and upward pressure on nearby spreads. LME Nickel stocks of 458838 tonnes as of August 4 started to rebound from a low of 452,580 tonnes last week. The drop in LME aluminum inventories is continued after 26,075 tonnes of warrants were cancelled last week. Lead cancelled warrants started increasing at slower pace as ratio rebounded to 26.05%. Stocks for copper and zinc in the Shanghai bonded zone in July increased month-on-month, reflecting slow-moving trade and weak end-users demand while nickel stocks soared to 60,000-70,000 tonnes. 


LME Warehouse Updates (in ton)

LME MetalsChange in
Stocks
Total
Inventories
Change in
CW
Cancelled
Warrants (CW)
CW % of Total
Inventory
Remarks
Aluminum-68753436975-825143145041.65%CW ratio started improving
Copper-6503454754000268507.77%Stocks were increased in July at faster pace
Nickel-9004600985415287433.23%Stocks hit record high levels
Lead-152521857548505705026.10%Cancelled warrant ratio have sharply reduced
Zinc-200043480005500012.65%Stockpiles in Antwerp double to highest since Feb 14

Analytical Comment

Commodities posted biggest monthly loss in July since 2011 amid a price collapse that drove oil into a bear market and pushed gold to a five-year low. Base metals dropped sharply near to six years low on oversupply worries, concerns of Chinese demand and stronger dollar on potentials of interest rate lift off from US Federal reserve. In last two days base metal complex fell heavily to their record lows on dollar’s rally on Fed rate hike speculations and China slowdown added demand concern. There will be risk on rally in the metals on corrective mode in coming days amid dollar stability and short covering bets but overall bias still remains bearish until market gets some good fundamental trigger and show pullback from their major upside zones. Investors in this week will majorly focus on US monthly jobs report to get further direction.

LME Metals Daily % Change (LME in $/Tn)


Commodity

Contract

Close

Previous

Change

% Change

LME Copper3M52305765-535-9.28
LME Nickel3M1104011980-940-7.85
LME Zinc3M19162000-84-4.20
LME Lead3M17021760-58-3.30
LME Aluminum3M16181691-73-4.32


MCX Metals Daily % Change (n Rs/Tn)


Commodity

Contract

Close

Previous

Change

% Change

Copper31-Jul335.4368.7-33.3-9.03
Nickel31-Jul694.3742.5-48.2-6.49
Zinc31-Jul123.35126.8-3.45-2.72
Lead31-Jul108.1111.55-3.45-3.09
Aluminum31-Jul101.9104.85-2.95-2.81

Courtesy : Emkay Commotrade


Emkay Commotrade Ltd.

7th Floor, The Ruby, Senapati Bapat Marg, Dadar - West, Mumbai - 400028. 

India Tel: +91 22 66121212 Fax: +91 22 66121299


Key Words:  base metal  base metals prices    
Relative News

Price

more
#1 Refined Cu
Oct.17
46700.0
-215.0
(-0.46%)
Aluminum Ingot
Oct.17
13960.0
80.0
(0.58%)
#1 Lead
Oct.17
17000.0
150.0
(0.89%)
0# Zinc
Oct.17
18890.0
-110.0
(-0.58%)
#1 Tin Ingot
Oct.17
139000.0
750.0
(0.54%)

[Base Metal] Base Metals Daily Report 04 August,2015 - Emkay Commotrade

Industry News 03:07:13PM Aug 05, 2015 Source:SMM

By  Paul Ploumis 05 Aug 2015  Last updated at  03:21:06 GMT

According to the LME’s Commitments of Traders Report (COTR), Money managers reduced slightly their net short position in the week ending July 26 - short-covering at 14559 lots was countered by substantial long liquidation of 8419 lots. The fund position was net short for the third consecutive weeks.

Overview

•The Australian dollar jumped from record low levels after the Reserve Bank of Australia left interest rates unchanged at a policy meeting

•The Shanghai composite index up 3.69 percent after the country's authorities stepped up their efforts to curb short selling to halt a rout

•A stronger dollar on Fed imminent rate liftoff estimates, signs of China weaknesses and oversupply worries weighed down demand for industrial metals in the globe

•Raw materials index has slumped 11 percent in 2015 amid expanding gluts and concern slower economic growth in China will crimp demand and dollar Spot Index is up 2.4 percent this month


Bullish factors

Bearish factors

  • Copper production problems in Zambia and Chile tempered those worries 

  • Chinese domestic production of primary aluminum of a record 2.76 million tonnes in June was up 3.3 percent from May 

  • US vehicle sales were particularly strong in July - annualized sales of 17.6 million units (mu) compares with 17.2 mu in June. 

  • Chinese domestic production of refined copper of 695,121 tonnes in June was up 13.1 percent from last yea 

       •China lead acid batteries exports rises in June at 17920 T.
  • Nickel retreated 1.6 percent to $12,745 a ton in London. Aluminum and tin also fell more than 1%. –INSG 

  • INSG sees world primary nickel production falling around 1.5 percent to 1.96 million tonnes in 2015, the same level as 2013, and expecting demand to increase 3.74 percent to 1.94 million tonnes this year. 

  • ILZSG and WBMS data showing that Lead supply and demand are all but balanced - there was a 7,000-tonne surplus in January-May 

  • ILZSG figures for May showed that zinc market flipped into a supply deficit of some 34,000 tonnes. 

  • The Shanghai Composite has crumbled more than 30 percent from its mid-June peak and China’s Yuan hit a four-month low against the U.S. dollar 

 LME Commitment of Traders Report

According to the LME’s Commitments of Traders Report (COTR), Money managers reduced slightly their net short position in the week ending July 26 - short-covering at 14559 lots was countered by substantial long liquidation of 8419 lots. The fund position was net short for the third consecutive weeks. Over the week from July 26- July 19, copper net long money managers positions fell by 8419 lots last week to 1,28335 lots. The decline in the net length was driven by 8,419 lots of long liquidation and 14559 lots of short-covering. Overall net position short by 6,140 lots the potential for short-covering to be triggered should the metal fail to hold onto its losses remains. Outstanding interest in the same period decreased by 41677 lots to 409361 lots. From the current chart and table we can conclude that market bets moved on both the sides in last week as china slump liquidated the longs on weak sentiments while short moves out on fear of reversal on oversold prices. The net short positions increased in last week showing weaknesses in the prices. 

Copper

Total OI

Shorts

Longs

Net

26/06/2015451038-145468136754-8714
03/07/2015409361-130909128335-2574
Change-4167714559-84196140

Spread Analysis

Copper spreads on the London Metal Exchange (LME) entering into backwardation from deep contango. Copper Cash to three months spread has eased significantly from the July average of $15.41 - it was last at $8.50. Lead cash to three months spread has eased significantly from the July average of $12.91 - it was last at $7.00. This highlights the increased potential for short-covering. For aluminum prices, the contango has started to tighten of late, with the cash-threes spread currently at $35.25, down from $40.00 last week but still sharply up from the start of May. The benchmark cash-to-three-months part of the LME forward curve closed in last week of June valued at $31-per tonne contango, that’s the lowest cash premium since the fourth quarter of last year. 


Stock Analysis

LME copper stocks surged over the first couple of months of 2015, peaking at 346,525 tonnes in July. LME Copper stocks increased at a faster pace in July; the decline from mid- March seems to have been undermined, exerting downward pressure on spot prices and upward pressure on nearby spreads. LME Nickel stocks of 458838 tonnes as of August 4 started to rebound from a low of 452,580 tonnes last week. The drop in LME aluminum inventories is continued after 26,075 tonnes of warrants were cancelled last week. Lead cancelled warrants started increasing at slower pace as ratio rebounded to 26.05%. Stocks for copper and zinc in the Shanghai bonded zone in July increased month-on-month, reflecting slow-moving trade and weak end-users demand while nickel stocks soared to 60,000-70,000 tonnes. 


LME Warehouse Updates (in ton)

LME MetalsChange in
Stocks
Total
Inventories
Change in
CW
Cancelled
Warrants (CW)
CW % of Total
Inventory
Remarks
Aluminum-68753436975-825143145041.65%CW ratio started improving
Copper-6503454754000268507.77%Stocks were increased in July at faster pace
Nickel-9004600985415287433.23%Stocks hit record high levels
Lead-152521857548505705026.10%Cancelled warrant ratio have sharply reduced
Zinc-200043480005500012.65%Stockpiles in Antwerp double to highest since Feb 14

Analytical Comment

Commodities posted biggest monthly loss in July since 2011 amid a price collapse that drove oil into a bear market and pushed gold to a five-year low. Base metals dropped sharply near to six years low on oversupply worries, concerns of Chinese demand and stronger dollar on potentials of interest rate lift off from US Federal reserve. In last two days base metal complex fell heavily to their record lows on dollar’s rally on Fed rate hike speculations and China slowdown added demand concern. There will be risk on rally in the metals on corrective mode in coming days amid dollar stability and short covering bets but overall bias still remains bearish until market gets some good fundamental trigger and show pullback from their major upside zones. Investors in this week will majorly focus on US monthly jobs report to get further direction.

LME Metals Daily % Change (LME in $/Tn)


Commodity

Contract

Close

Previous

Change

% Change

LME Copper3M52305765-535-9.28
LME Nickel3M1104011980-940-7.85
LME Zinc3M19162000-84-4.20
LME Lead3M17021760-58-3.30
LME Aluminum3M16181691-73-4.32


MCX Metals Daily % Change (n Rs/Tn)


Commodity

Contract

Close

Previous

Change

% Change

Copper31-Jul335.4368.7-33.3-9.03
Nickel31-Jul694.3742.5-48.2-6.49
Zinc31-Jul123.35126.8-3.45-2.72
Lead31-Jul108.1111.55-3.45-3.09
Aluminum31-Jul101.9104.85-2.95-2.81

Courtesy : Emkay Commotrade


Emkay Commotrade Ltd.

7th Floor, The Ruby, Senapati Bapat Marg, Dadar - West, Mumbai - 400028. 

India Tel: +91 22 66121212 Fax: +91 22 66121299


Key Words:  base metal  base metals prices