Business Analytics Wing

Metals Insight 15 June 2018

Base Metals: Technical Recommendations:

Exchange Contract S2 S1 PCP R1 R2 Recommendation

Copper LME 3M Fwd 7006 7032 7160 7203 7338 Sell at 7200-7205 TP 7000 SL 7350

Copper MCX Jun-18 478.6 480.1 481.6 483.8 485.3 Sell at 484-484.50 TP 477 SL 487

Lead LME 3M Fwd 2451 2455 2459 2461 2463 Trading Range 2450-2465

Lead MCX Jun-18 165.0 165.7 166.5 167.3 167.8 Trading Range 165-168

Zinc LME 3M Fwd 3138 3158 3180 3205 3221 Sell at 3215-3220 TP 3130 SL 3140

Zinc MCX Jun-18 214.2 215.6 217.1 218.3 219.1 Sell at 218.80-219 TP 215 SL 220.50

Nickel LME 3M Fwd 14929 15104 15280 15535 15695 Sell at 15530-15560 TP 15000 SL 15700

Nickel MCX Jun-18 1013.8 1022.6 1032.2 1042.9 1049.8 Sell at 1045-1048 TP 1025 SL 1060

Aluminum LME 3M Fwd 2240 2247 2253 2267 2276 Trading Range 2240-2280

Aluminum MCX Jun-18 153.3 153.7 154.0 154.7 155.1 Trading Range 153-156

LME Lead (Source- Reuters)

 LME copper prices slid for a second session on Friday, with the
market set for its biggest weekly decline since late April on
Daily MPB3=LX 12-02-2018 - 07-06-2018 (LON)

Price
USD
T

concerns over demand in top consumer China. 2,580

2,560


2,540

For the week, LME copper has dropped 2.2 percent, the biggest 2,520

2,500

2,480

weekly loss since the week ending April 27. The Shanghai contract 2,460
2,452.00
2,440

2,420

is down 1.2 percent, the most since the week ending March 23. 2,400

2,380

2,360

 China's industrial output, investment and retail sales all grew less 2,340

2,320

2,300

than expected, offsetting upbeat trade data and suggesting further 2,280

2,262.26
2,260

Auto

weakness ahead if Beijing sustains its crackdown on factory 12

Mon 12-02-2018
19 26
February 2018
05 12 19
March 2018
26 03 09 16
April 2018
23 30 08 14 21
May 2018
29 04

pollution and local government spending. LME Aluminum (Source- Reuters)

 While slower Chinese growth suggested lower demand, China's Daily MAL3=LX, MPB3=LX 12-02-2018 - 07-06-2018 (LON)

Price

output of 10 non-ferrous metals including copper, aluminum, lead,

USD
T
2,640

2,600

zinc and nickel rose 4.3 percent in May from a year earlier to 4.55 2,560

2,520

2,480

million tonnes. 2,440

2,400


2,360

As per government, China's aluminum production rose 1.5 percent 2,320

2,295.50
2,280

from a year earlier to 2.79 million tonnes in May.

2,240

2,200

2,160

2,120

2,080

For the day, we recommended selling in Copper, Nickel & Zinc whereas 2,041.19
2,040

2,000
Auto

range bound trend in Lead & Aluminum is expected. 12

Mon 12-02-2018
19 26
February 2018
05 12 19
March 2018
26 03 09 16
April 2018
23 30 08 14 21
May 2018
29 04

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Aluminum- 3 Month forward LME:
 LME Aluminum corrected on Thursday and closed lower by 1.16% as per closing while MCX futures market went same by 0.55% on Thursday.
 LME stocks decreased by 0.51% whereas the cancelled warrants surged by 0.75% as per Thursday’s closing.
 Aluminum failed to take any support from the reports that Brazilian court denied an appeal of an injunction limiting production at Norsk
Hydro's Alunorte alumina refinery.
 Meanwhile as per Chinese government data, China's aluminum production rose 1.5 percent from a year earlier to 2.79 million tonnes in May.
 The Canadian province of Quebec will offer C$100 million ($77 million) in loans and guarantees on loans to steel and aluminium companies hit by
recent U.S. tariffs, the province's economy minister said on Thursday.
 We recommend range bound trade in Aluminum today.

Table: MCX and LME Aluminum Derivative Analysis:

MCX LME
Date Price (Rs/Kg) Volume Open Interest Price ($/MT) Volume Inventory Cancelled Warrants
6/12/2018 156.35 7556 3358 2292.50 15324 1168975 230325
6/13/2018 154.85 8884 3365 2279.00 19388 1153875 216725
6/14/2018 154.00 6474 3281 2252.50 35814 1148000 218350
Abs. Change -0.85 -2410.00 -84.00 -26.50 16426.00 -5875.00 1625.00
% Change -0.55% -27.13% -2.50% -1.16% 84.72% -0.51% 0.75%

Copper- 3 Month forward LME:

 LME Copper prices corrected and moved down by 1.13% to $7160 per MT on Thursday while MCX copper futures for April delivery decreased by
0.72% to Rs. 481.55/kg on Thursday.
 As per LME data, Copper stocks decreased by 0.03% whereas the cancelled warrants declined by 2.63%.
 LME copper prices slid for a second session on Friday, with the market set for its biggest weekly decline since late April on concerns over demand in top
consumer China.
 For the week, LME copper has dropped 2.2 percent, the biggest weekly loss since the week ending April 27. The Shanghai contract is down 1.2 percent,
the most since the week ending March 23.
 We recommend selling in Copper today.

Table: MCX and LME Copper Derivative Analysis:

MCX LME
Date Price (Rs/Kg) Volume Open Interest Price ($/MT) Volume Inventory Cancelled Warrants
6/12/2018 484.60 38501.00 17339.00 7213.00 14582 299500 61925
6/13/2018 485.05 41478.00 17089.00 7241.50 10455 293450 53225
6/14/2018 481.55 39157.00 16045.00 7160.00 14657 293550 51825
Abs. Change -3.50 -2321.00 -1044.00 -81.50 4202.00 100.00 -1400.00
% Change -0.72% -5.60% -6.11% -1.13% 40.19% 0.03% -2.63%

Nickel- 3 Month forward LME:

 Nickel forward went negative on Thursday as prices moved down in LME by 2.09% whereas at MCX prices moved down by 2.36% on Thursday.
 Stocks at LME tracked warehouses declined by 0.25% whereas cancelled warrants increased by 0.08% on Thursday.
 China will ban new capacity for steel, coke and primary aluminum production in some key areas, including the Beijing-Tianjin-Hebei and Yangtze River
Delta regions, the State Council said the latest effort to improve air quality.
 Brazil's Vale on Thursday unveiled a $690 million financing to expand a Canadian nickel mine, agreeing to sell unmined cobalt from Voisey's Bay as a
booming electric vehicle market propels demand for the critical battery ingredient.
 We recommend selling in Nickel today.

Table: MCX and LME Nickel Derivative Analysis: (MCX Closing Prices are taken as per Thursday’s closing)
MCX LME
Date Price (Rs/Kg) Volume Open Interest Price ($/MT) Volume Inventory Cancelled Warrants
6/12/2018 1029.00 33169.00 11568.00 15255.00 4196 279120 66600
6/13/2018 1054.20 41745.00 12560.00 15650.00 6141 277014 65358
6/14/2018 1032.20 52085.00 8625.00 15280.00 9501 276312 65412
Abs. Change -22.00 10340.00 -3935.00 -370.00 3360.00 -702.00 54.00
% Change -2.09% 24.77% -31.33% -2.36% 54.71% -0.25% 0.08%

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Lead: 3 Month forward LME:

 Lead prices went down at MCX futures exchange on Thursday by 0.72% and went lower by 1.01% in LME as per Thursday’s closing.
 On Thursday, LME tracked warehouses showed stocks declined by 0.26% and cancelled warrants showed surge by 4.14%. .
 Lead prices even lost its ground on Thursday even after inventories decline by 0.26, a sign that shortages in China were starting to ease. LME lead had
gained 14 percent when it touched a more than three-month peak of $2,555.50 on Thursday after rallying for slightly over a month.
 The previous gains were largely fuelled by worries about shortages in China due to rolling environmental inspections on the secondary lead processing
sector that resulted in some smelter closures.
 And over the time period of 2014-2016 global mined lead supply had shrunk around 10%.
 We recommend range bound trade in Lead today.

Table: MCX and LME Lead Derivative Analysis:

MCX LME
Date Price (Rs/Kg) Volume Open Interest Price ($/MT) Volume Inventory Cancelled Warrants
6/12/2018 166.55 11946.00 11568.00 2468.00 2476 132750 43600
6/13/2018 167.65 14534.00 12560.00 2485.00 3103 132625 43475
6/14/2018 166.45 11855.00 8625.00 2460.00 2602 132275 45275
Abs. Change -1.20 -2679.00 -3935.00 -25.00 -501.00 -350.00 1800.00
% Change -0.72% -18.43% -31.33% -1.01% -16.15% -0.26% 4.14%

Zinc: 3 Month forward LME:

 Zinc prices on Thursday traded negative as went lower by 0.7% at MCX futures market on Thursday. Whereas LME prices closed down by 1% on
Thursday.
 At LME, stocks declined by 0.65% and the inventories withdrawals in form of cancelled warrants went down by 8.81% as per the closing of LME trading
session on Thursday.
 China will ban new capacity for steel, coke and primary aluminum production in some key areas, including the Beijing-Tianjin-Hebei and Yangtze River
Delta regions, the State Council said the latest effort to improve air quality.
 Separately as per Chinese steel industry association the country will shut more outdated steel plants and bring capacity to less than 1 billion tonnes by
2025 adding Chinese demand for the metal is set to decline gradually
 According to ILZSG, Some 880,000 tonnes of additional zinc mine capacity are due to come on stream this year, meaning the market will be much less
tight.
 We suggest selling in Zinc today.

Table: MCX and LME Zinc Derivative Analysis:

MCX LME
Date Price (Rs/Kg) Volume Open Interest Price ($/MT) Volume Inventory Cancelled Warrants
6/12/2018 217.45 20079.00 11568.00 3199.00 9757 248450 21175
6/13/2018 218.60 20009.00 12560.00 3212.00 5953 245150 17875
6/14/2018 217.10 21665.00 8625.00 3180.00 9131 243550 16300
Abs. Change -1.50 1656.00 -3935.00 -32.00 3178.00 -1600.00 -1575.00
% Change -0.69% 8.28% -31.33% -1.00% 53.38% -0.65% -8.81%
Performance Snapshot at COMEX
1-day (% 5-day (%
Metal Date Close Price Change) Change)
Copper (cents/lb) 14/06/18 321.05 -1.08 -1.34
Equity and Currency Market Performance
Indices Today Yesterday % Change Currencies Open High Low Close % Change
Dow Jones Indus Avg 25175.31 25201.20 -0.10% USD/INR 67.5650 67.7250 67.5600 67.6800 0.06%
S&P 500 2782.49 2775.63 0.25% AUD/USD 0.7576 0.7582 0.7472 0.7478 -1.29%
Brazil Bovespa 71421.19 72122.14 -0.97% USD/SGD 1.3350 1.3449 1.3327 1.3448 0.71%
FTSE-100 London 7765.79 7703.71 0.81% EUR/USD 1.1789 1.1851 1.1560 1.1567 -1.88%
DAX Germany 13107.10 12890.58 1.68%
USD/JPY 110.3200 110.6900 109.8900 110.6200 0.27%
NIKKEI Japan 22738.61 22966.38 -0.99%
GBP/USD 1.3373 1.3446 1.3255 1.3261 -0.84%
Hang Seng China 30440.17 30725.15 -0.93%
Nifty India 10808.05 10856.70 -0.45% USD/CAD 1.2982 1.3109 1.2945 1.3101 0.90%
The MSCI World 2142.02 2140.20 0.09% USD/SEK 8.6062 8.7452 8.5762 8.7405 1.56%
US10 Y Bond 2.95 2.98 -1.11% USD/CHF 0.9851 0.9973 0.9823 0.9968 1.15%
India 10 Y Bond 7.95 7.93 0.19% Dollar Index 93.4970 94.9310 93.1930 94.7720 1.13%

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