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Commodity Research Report 16 October 2017 Ways2Capital .pdf


Original filename: Commodity Research Report 16 October 2017 Ways2Capital.pdf
Title: COMMODITY CALLS OF THE WEEK
Author: w2c

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✍ MCX DAILY LEVELS
DAILY

EXPIRY DATE

R4

R3

R2

R1

PP

S1

S2

S3

S4

ALUMINIUM

31-OCT-2017

142.00

141.00

140.00

139.00

138.00

137.00

136.00

135.00

134.00

COPPER

30- NOV-2017

466.00

462.00

458.00

454.00

448.30

444.0

440.00

436.00

432.00

3523

3473

3423

3373

3323

3273

3223

3173

3123

CRUDE OIL

18-OCT-2017

GOLD

05-DEC--2017

30200

30100

29999

29915

29813

29713

29613

29513

29413

LEAD

31-OCT-2017

168.40

167.40

166.40

165.40

164.40

163.40

162.40

161.40

160.40

NATURAL GAS

26-OCT-2017

202.00

200.00

198.00

196.90

195.40

193.40

191.40

189.40

187.40

NICKEL

31-OCT-2017

778

771

764

757

750.10

743

735

728

721

SILVER

05-DEC--2017

41000

40850

40700

40500

40367

40100

39900

39700

39500

ZINC

31-OCT-2017

217.80

216.00

215.00

214.00

212.80

211.80

210.80

209.80

208.80

Tuesday 17 October 2017

✍ MCX WEEKLY LEVELS
WEEKLY

EXPIRY DATE

R4

R3

R2

R1

PP

S1

S2

S3

S4

ALUMINIUM

31-OCT-2017

146.00

144.00

142.00

140.00

138.00

136.00

134.00

132.00

130.00

COPPER

30- NOV-2017

485.00

474.00

466.00

458.00

448.30

440.00

432.00

423.00

414.00

3723

3623

3523

3423

3323

3223

3123

3023

2923

CRUDE OIL

18-OCT-2017

GOLD

05-DEC--2017

30600

30400

30200

29999

29813

29613

29413

29210

29013

LEAD

31-OCT-2017

172.40

170.40

168.40

166.40

164.40

162.40

160.40

158.40

156.40

NATURAL GAS

26-OCT-2017

206.00

204.00

202.00

198.00

195.40

191.40

187.40

185.40

183.40

NICKEL

31-OCT-2017

799

786

778

764

750.10

735

721

711

701

SILVER

05-DEC--2017

41600

41300

41000

40700

40367

39900

39500

39200

38900

ZINC

31-OCT-2017

222.00

220.00

217.80

215.00

212.80

210.80

208.80

206.80

204.80

✍ FOREX DAILY LEVELS
DAILY

EXPIRY DATE

R4

R3

R2

R1

PP

S1

S2

S3

S4

USDINR

27-OCT-17

65.90

65.60

65.30

65.10

64.90

64.60

64.30

64.00

63.70

EURINR

27-OCT-17

77.90

77.70

77.50

77.00

76.50

76.25

76.00

75.75

75.50

GBPINR

27-OCT-17

88.30

87.80

87.30

86.80

86.30

85.80

85.30

84.80

84.30

JPYINR

27-OCT-17

58.54

58.44

58.34

58.24

58.14

58.04

57.94

57.84

57.74

✍ FOREX WEEKLY LEVELS
WEEKLY

EXPIRY DATE

R4

R3

R2

R1

PP

S1

S2

S3

S4

USDINR

27-OCT-17

66.90

66.30

65.90

65.30

64.90

64.30

63.70

63.30

62.70

EURINR

27-OCT-17

78.90

78.50

77.90

77.50

76.50

76.00

75.50

75.00

74.50

GBPINR

27-OCT-17

90.30

89.30

88.30

87.30

86.30

85.30

84.30

83.30

82.30

JPYINR

27-OCT-17

58.95

58.70

58.54

58.34

58.14

57.94

57.74

57.50

57.20

MCX - WEEKLY NEWS LETTERS
 The euro is on track for its biggest weekly rise in a month as investors put political concerns on the
back-burner and look ahead to a European Central Bank meeting at which it is expected to outline
plans to unwind its huge stimulus programme.
 The U.S. dollar held steady near two-week lows against other major counterparts on Friday, as
investors remained cautious ahead of a highly-anticipated U.S. inflation report due later in the day.
 Crude oil prices rallied on Friday, supported by news in the previous session of a third weekly
decline in U.S. crude stockpiles and amid global signs the market is tightening.


Gold prices moved higher on Friday, as sentiment on the greenback remained vulnerable ahead of

highlyanticipated data on U.S. inflation due later in the day. Comex gold futures were up $2.55 or
about 0.20% at $1,299.05 a troy ounce by 03:15 a.m. ET (07:15 GMT), just off a two-and-a-half week
high of $1,300.73 hit overnight.


President Donald Trump will lay out a more confrontational strategy toward Iran by the United

States on Friday in a speech in which he is likely to strike a blow at an international Iran nuclear deal,
complicating U.S. relations with European allies.


U.S. retail sales recorded their biggest increase in 2-1/2 years in September likely as

reconstruction and clean-up efforts in areas devastated by Hurricanes Harvey and Irma boosted
demand for building materials and motor vehicles. 
 Retail sales rose in September, pointing to a strong economy, official data showed on Friday. In a
report, the U.S. Commerce Department said that retail sales rose 1.6% from the prior month, barely
missing forecasts for a gain of 1.7%. Retail sales in August fell 0.1%, which was revised from a
negative 0.2%.

✍ BULLION
Gold prices rose as minutes from a U.S. Federal Reserve September meeting showed policymakers had a
prolonged debate about prospects of a pick-up in inflation and slowing the path of future interest rate rises
if it did not. Weak dollar index and geopolitical tensions in Spain and North Korea further supported the
rally in gold. Russia and China both called for restraint on North Korea following a Twitter post from
U.S. President Donald Trump hinting that military action was on his mind. The focus of the markets have
now shifted from the geo-political crisis to the economic data that will be released from the US, besides,
the possibility of rate hike scenario in the US is a factor for gold prices to move lower in the week ahead.
Precious metals continued to gain after monthly consumer inflation numbers from US disappointed a bit
and led to a rally in bullions. However, the gains were limited in domestic markets considering the fall in
US dollar prices against INR. Bullions prices have closed positive for second straight week while long
positions have been reduced by large hedgers and professional money which suggests that immediate
upside could be limited. Also, the current leg of rally seems to have extended enough that correction on
the downside is expected to hit both the commodities. However, there is clear reversal in prices marked in
Silver and it might continue to move compared to Gold. Gold could mark reversal in prices with break
above 1314$ in spot. If prices extend above 1314$, the current rally which looks like a corrective structure
now will change into an impulsive one and major rally will witnessed any time soon.
Strong Indian demand outlook in the upcoming Diwali season is offering decent buying for Gold. The
metal is holding up even as US stocks hit record highs. A rather tepid reading on the US inflation front
also boosted Gold. The US Labor Department said its consumer price index climbed by 0.5% in
September after rising by 0.4% in August.

The increase in consumer prices was largely due to a jump in energy prices, which soared by 6.1% in
September after rising by 2.8% in August. However, excluding food and energy prices, core consumer
prices inched up by 0.1% in September after edging up by 0.2% in August. COMEX Gold broke above
$1300 per ounce levels while the MCX Gold edged up well above Rs 29800 per 10 gram levels.
Meanwhile, the Fed is likely to raise rates so long as the medium-term economic outlook remains
unchanged, according to the minutes of its latest meeting. The Fed noted that recent hurricanes had not
disrupted that outlook and it expects slower growth for a few months, but does not expect a long-term
effect. Some Fed policy members expressed concerns about inflation running below its 2% annual target,
while others worried that waiting for inflation to normalize policy could lead to an overheated market.
In India, Jewellery purchases exceeding Rs 50,000 will not require the PAN number to be provided after
the government reversed an earlier notification on last Friday. Jewellers will also not be required to
inform authorities about jewellery purchases of over Rs 50,000 after the government rescinded a
notification issued on August 23. This is keeping sentiments firm in local retail markets.

✍ BASE METAL
LME Copper prices gained momentum last week week and surged by more than 3 percent as global
investors chose to react to news of selective monetary easing in China once Chinese markets returned
from week long holiday. People's Bank of China's had announced on Sept. 30 that it would cut the reserve
requirement ratio (RRR) for some banks that meet certain requirements for lending to small business and
the agricultural sectors. Demand prospects brightened further after the International Monetary Fund raised
Chinese economic growth forecast for 2017 and 2018 to 6.8 percent and 6.5 percent respectively, both 0.1
percentage point higher than its previous forecast in July. Besides, persistent decline in LME stocks has
already pulled the inventories lower by 5 percent so far in October.

COMEX Copper futures have come off their one month high around $3.5 per pound this week though
supportive equities and upbeat global economic data are keeping the losses limited. MCX Copper futures
hit highs above Rs 451 per kg levels. BHP, Biliton,one of the world's largest copper miners, decided last
year to raise its annual exploration spending by 29%, allocating nearly all its $900 million budget to
finding new copper and oil deposits. The mining giant is committed to make of those two commodities
the pillars of its future growth. Analysts believe the red metal is well placed to benefit from the increasing
development of battery-powered vehicles, as they use more copper than regular cars. Internationally,
Chilean state copper miner Codelco kicked off a tender process for a $1.2 billion plant and has since
indicated it has received several expressions of interest. It's estimated the Spence project will generate
5,000 jobs during its construction phase, and add about 185,000 tonnes of copper a year to BHP's output
over the first decade of the expanded operation, with first production expected in 2021.
BHP, already the world's second-biggest listed copper miner, decided last year to raise its annual
exploration spending by 29%, allocating nearly all its $900 million budget to finding new copper and oil
deposits. The mining giant is committed to make of those two commodities the pillars of its future
growth. Analysts believe the red metal is well placed to benefit from the increasing development of
battery-powered vehicles, as they use more copper than regular cars.
Currently, electric cars add up to roughly 1 million, out of a global fleet of closer to 1.1 billion. But BHP
believes that figure could rise to 140 million electric vehicles, or 8% of the global fleet, by 2035
Nickel has enough room for the upside as the commodity was highly oversold in the past and is now
reviving from multi-year lows. This revival in prices is now catching fire and prices are expected to cross
yearly highs of 816.5 in near term.
The other metals except Aluminium have the potential to move another 4-5% higher from current levels.
The stronger fundamentals are now topping out with extreme economic numbers from China are now
deteriorating. Also, another thing which is keeping the rally alive in metals is the strong bias in global
equity markets which has created the environment of bullishness in the assets of risk.

✍ ENERGY
WTI and Brent oil prices declined by around 4.4 percent and 1 percent respectively last week while, MCX
oil prices trades higher by 2.2 percent in the same time frame. OPEC forecast higher demand for 2018 and
heightened tensions in Kurdistan supported prices. On the other side, U.S. oil exports are pouring into the
market at a record pace, but the world's second largest crude trader Glencore said the market can absorb
the volumes along with those from the North Sea and West Africa. The Organization of the Petroleum
Exporting Countries is seeking to hold a second meeting with U.S. independent oil firms as well as hedge
funds, OPEC's Secretary General said, that no oil producer could afford to live in isolation.
WTI Crude oil hit two week highs above $51 per barrel as falling US crude inventories boosted
sentiments. Broad demand side remains bullish too. EIA reported a 2.8-million-barrel draw in US crude
oil inventories for the week to October 6th yesterday. Record high US equities also kept the outlook firm
for the commodity. MCX Crude oil futures closed above Rs 3300 per barrel mark. Oil has managed to
edge up after testing its three week low.
Oil cartel OPEC said in its latest Monthly Oil Market Report that it had revised upwards its 2017 oil
demand growth forecast by 30,000 bpd to 1.5 million bpd, which also helped to boost prices despite the
cartel also reporting an increase in its September oil production to 32.75 million barrels – 25,000 bpd
above the quota OEPC agreed to last November. Crude Oil recovered back after stronger than expected
inventories draws. Prices have made a habit to react lately to the inventories number released by EIA and
reacting inversely immediately after the inventory number and it has been happening from past 2-3
months. The shorter term fundamentals for the commodity are improving with supply disruptions in many
parts of the world. This is the second straight week where operational oil rigs have reduced by 5. This has
come at a time when prices are trading near the upper range of past few years. With heavy reduction in
short positions from large hedgers in the last week’s COT report suggests that larger players are now
convinced that prices might be moving higher. Technically speaking, we now have a resistance near 54$
with rising channel resistance along with wave C which started from 45.5$ is expected to equate wave A
which completed at 50.4$.


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