INSIDE COMMODITIES
Wednesday, October 15, 2014
CHILE EXPORTS-COPPER PRICE
MARKETS SNAPSHOT
Click on the chart for full-size image
Brent edged higher, recovering from its biggest daily fall in three years.
London copper gained, supported by a growing consensus that a market surplus will be delayed until next year while gold eased as the dollar and equities edged up after sharp losses. European stocks looked
set to open lower and Asian markets remained fragile. Wall Street
closed slightly up on Tuesday. To read more, please click here
Contract (AS OF 0614 GMT)
Last
Change
YTD
NYMEX light crude
$82.07
0.28%
-16.85%
NYMEX RBOB gasoline
$2.19
0.22%
-21.74%
$738.00
-1.11%
-20.97%
$3.85
0.76%
-9.79%
$1,225.70
-0.54%
2.27%
LME Copper
$6,787
-0.19%
-7.61%
LME Aluminium
$1,948
-0.10%
8.33%
CBOT Corn
$3.55
-0.56%
-15.40%
CBOT Wheat
$5.07
-0.39%
-15.86%
R2,153
-0.46%
-18.65%
ICE gas oil
NYMEX natural gas
Spot Gold
TOP NEWS
 China Sept inflation cools to near 5-year low
 Saudi price war should fuel drive for U.S. crude exports
 IEA sees 2015 oil demand growth much lower, supply
hitting prices
 S Korea's SK energy to restart secondary unit at Ulsan
this week
 Canada worker, hog shortages leave industry squealing
 Indonesia likely to keep palm export tax at zero for Nov Industry
 EU to ban fish from Sri Lanka, saying lax on illegal
fishing
 Rio Tinto lifts iron ore output to record as ore prices seesaw
 Turquoise Hill cuts Oyu Tolgoi 2014 gold, copper output
Malaysia Palm Oil (Ringgit) (3M)
Index (Total Return)
Latest Close
Change
YTD
Thomson Reuters/Jefferies CRB
274.5597
-1.02%
-2.21%
S&P GSCI
4203.8938
-2.61%
-12.96%
Rogers International
3249.29
0.47%
-12.18%
Dow Jones - UBS
134.6268
-
-
Cont Commod Indx
492.8288
0.03%
-3.00%
Latest Close
Change
YTD
16315.19
-0.04%
-1.58%
US DOLLAR INDEX
85.934
0.34%
7.23%
US BOND INDEX (DJ)
340.96
0.54%
7.38%
Index (Total Return)
US STOCKS (DJI)
ECONOMIC WATCH
GMT
Indicators
Unit
Reuters
Prior
k
-35.0
-37.2
08:30
GB
Claimant count unem chng
 Global copper market in deficit in 2014 for 5th year in row
08:30
GB
ILO unemployment rate
pct
6.1
6.2
12:30
US
Retail sales mm
pct
-0.1
0.6
CLICK HERE FOR TECHNICAL CHARTS
12:30
US
Core PPI final demand mm
pct
0.1
0.1
12:30
US
PPI final demand mm
pct
0.1
0.0
12:30
US
Retail control
pct
0.4
0.4
12:30
US
Retail sales ex-autos mm
pct
0.3
0.3
12:30
US
Core PPI final demand yy
pct
1.8
1.8
12:30
US
NY Fed Manufacturing
--
20.5
27.54
12:30
US
PPI final demand yy
pct
1.8
1.8
14:00
US
Business inventories mm
pct
0.4
0.4
forecast
INSIDE COMMODITIES
October 15, 2014
MARKET MONITOR
Brent edged higher above $85 a barrel, recovering from its biggest daily fall in three years, a drop that pushed prices to the
lowest since late 2010 as traders scrambled to keep up with the
downward momentum. Brent crude for November climbed 36
percent to $85.35 a barrel. U.S. crude gained 24 percent to
$82.04.
ber copper contract on the Shanghai
Futures
Exchange trimmed overnight gains of more than 1 percent to
0.7 percent.
Gold eased for a second session as the dollar and equities
edged up after sharp losses, but lingering worries over the
global economy could support the safe-haven metal. Spot gold
had slipped 0.4 percent to $1,227 an ounce.
The euro wallowed after disappointing data out of Europe
knocked the single currency. The dollar index, which tracks the
greenback against six major currencies, added about 0.1 percent to 85.936. The common currency fell to a session low of
$1.2624, and last stood at $1.2638.
Chicago soybean futures slipped, coming off a three-week top
reached in the previous session, after a report from the U.S.
Department of Agriculture showed the harvest was progressing faster than expected. Chicago Board of Trade front-month
soybean futures fell 0.41 percent to $9.60-3/4 a bushel.
London copper hovered near its highest in four weeks, supported by a growing consensus that a market surplus will be
delayed until next year, although a stronger dollar pressured
prices. Three-month copper on the London Metal Exchange
had slipped 0.4 percent to $6,770.50 a tonne, after a 1.4percent gain in the previous session. The most-traded Decem-
European stocks looked set to open lower and Asian markets
remained fragile as benign Chinese inflation data and gloom in
the euro zone added signs of a faltering global economic recovery. Wall Street closed slightly up on Tuesday.
TOP NEWS
China Sept inflation cools to near 5-year low
Saudi price war should fuel drive for U.S. crude exports
China's inflation rate slowed more than expected in September
to a near five-year low, adding to concerns that global growth is
cooling fast unless governments take bolder measures to shore
up their economies.
The consumer price index (CPI) rose 1.6 percent in September
from a year earlier, the National Bureau of Statistics said on
Wednesday, missing market expectations for a 1.7 percent rise
and down from 2 percent in August.
The CPI rose 0.5 percent in September from the previous
month, versus a 0.4 percent gain expected by economists.
With inflation well below the official annual target of 3.5 percent,
Chinese policymakers will have ample scope to announce more
stimulus measures, though analysts appear divided over
whether Beijing will continue to roll out more modest measures
or if it now needs to take more aggressive action such as cutting
interest rates to fend off the risks of deflation.
"Easing gains (in) non-food prices and the worsening PPI provide more evidence of a weakening economy, which means the
problems of weak domestic demand and over capacity are more
severe than expected," said Li Huiyong, an economist at
Shenyin & Wanguo Securities in Shanghai.
"We expect policymakers will take more measures to stabilise
the economy. The possibility of an interest rate cut is increasing
in the coming months."
The producer price index fell 1.8 percent for the 31st consecutive month, dragged by lower oil and steel prices as weakening
demand curbed companies' pricing power and put increasing
strains on their balance sheets and ability to pay back debts.
The market had expected a 1.6 percent fall in producer prices
after a drop of 1.2 percent in August.
Highlighting faltering demand in China, the country's secondbiggest steelmaker, Baoshan Iron and Steel (Baosteel), said on
Friday it will cut its main product prices for November delivery.
Saudi Arabia's move to keep crude oil production high, fueling a
steep global price slump, may have an unexpected consequence: intensifying the campaign by U.S. producers to scrap
Washington's decades-old ban on exports of domestic crude.
Global oil prices plummeted nearly 5 percent on Tuesday to
their lowest since 2010, as OPEC's core members showed no
sign of intervening to support the market. Amid talk of a price
war, Iran, generally a price hawk, has changed course and said
it can live with lower prices.
U.S. crudes have been trading at a discount to global prices
since the rise of the shale revolution four years ago. That price
squeeze has domestic producers eager to end the export ban
enacted during the Arab oil embargo of the 1970s.
"Fully lifting the oil export ban would go a long way toward keeping U.S. oil production up even if prices continue to languish,”
said Chris Faulkner, Chief Executive of Breitling Energy Inc.
"Our country can't afford to see the oil and gas boom start to
bust."
But many Americans, fearful of high gasoline prices, support the
ban, as do their members of Congress. President Barack
Obama has some leeway to allow more exports of some types
of oil, but political experts have said he is unlikely to do so without evidence that below-market U.S. crude prices are forcing
shale drillers to cut back or shut in output.
That scenario was highly unlikely during the past few years,
when crude prices spent a lot of time above $100. But with oil
plummeting and Saudi Arabia comfortable with crude as low as
$80 a barrel, the day may arrive sooner than many had expected.
U.S. gasoline pump prices have also dropped to near $3 a gallon for the first time since 2010. If prices stay that low, Americans could grow less fearful that exporting crude will trigger a
spike in retail prices, and more receptive to studies showing
exports would actually boost the economy.
2
INSIDE COMMODITIES
October 15, 2014
TOP NEWS (Continued)
IEA sees 2015 oil demand growth much lower, supply
hitting prices
S Korea's SK energy to restart secondary unit at Ulsan this
week
Demand for oil in 2015 will grow far slower than previously forecast as global economies remain weak, the International Energy
Agency said on Tuesday, and prices may extend their sharp fall
so long as OPEC shows no sign of countering a supply surge.
The IEA said it cut its 2015 estimate for oil demand growth by
300,000 barrels per day (bpd) from its previous forecast and
now expects demand growth of 1.1 million bpd to 93.5 million. It
cut its 2014 estimate by 200,000 bpd to 0.7 million bpd.
It said demand would be supported by prices near four year
lows - oil is around $88 a barrel from above $115 in June, a 25
percent drop resulting from a boom in U.S. shale oil production,
slow global growth and a strong dollar.
But it added that those low prices would remain under pressure
because of supply levels: Global oil supply rose by almost
910,000 bpd in September to 93.8 million bpd, almost 2.8 million
bpd higher than the previous year.
South Korea's SK Energy will restart a secondary unit at its
840,000 barrels-per-day Ulsan refinery this week after monthlong maintenance, but has no immediate plans to raise run rates
at its two refineries which are running at less than 80 percent of
total capacity, sources said on Wednesday.
The country's top refiner, fully owned by SK Innovation, plans to
restart the 85,000 bpd No. 2 residue hydrodesulfurization unit
(RHDS) on Thursday after shutting it on Sept. 15 for planned
maintenance, the sources said.
The RHDS unit removes sulphur from oil to produce cleaner
fuels such as gasoil and gasoline.
The shutdown of the unit failed to boost Asian gasoil margins,
which normally peak during the fourth quarter as the fuel is used
for heating during winter, traders said.
Indonesia likely to keep palm export tax at zero for Nov Industry
Canada worker, hog shortages leave industry squealing
Indonesia is expected to keep its export tax on crude palm oil at
zero for a second month in November, industry sources said on
Tuesday, as the top producer strives to remain competitive with
rival grower Malaysia, which has also removed the tax.
Benchmark crude palm oil (CPO) prices have dropped almost
20 percent this year and hit a 5-1/2-year low of 1,914 Malaysian
ringgit($586) a tonne last month in an oversupplied market
In an attempt to give the market a boost, the world's No.2 palm
oil producer, Malaysia, exempted the commodity from export
taxes from September until the end of December.
Indonesia followed by slashing its monthly CPO export tax to
zero for October from 9 percent in September and this is now
likely to be extended into November, said Steaven Halim, an
official at the Indonesian Palm Oil Association.
Shortages of hogs and packing plant workers in Canada, exacerbated by recent government restrictions, may severely cut hog
processing and pork exports, helping to keep North American
retail pork prices near record highs.
Farmers in Canada, the world's third-biggest pork shipper, are
also bracing for the spread of a deadly virus that has killed millions of piglets in the United States.
Further dwindling of Canadian supplies would especially reverberate in the United States, which relies on young Canadian
pigs for fattening and slaughter, and in markets as far away as
Japan and South Korea that import Canadian pork.
"If those Canadian pigs don’t flow south, you’re going to have
U.S. hog farmers bidding against each other to get pigs," said
University of Missouri livestock economist Ron Plain.
Rio Tinto lifts iron ore output to record as ore prices
see-saw
EU to ban fish from Sri Lanka, saying lax on illegal fishing
The European Commission proposed a ban on imports of fish
from Sri Lanka for not tackling illegal fishing properly and lifted a
ban on fish imports from Belize following the reform of its vessel
inspection practices.
The Commission on Tuesday also lifted warnings on Fiji, Panama, Togo and Vanuatu, saying they had implemented concrete measures to combat illegal fishing.
The four countries thus avoided being placed on the "red list" of
nations that are not allowed to sell fish to the 28-nation European Union, the world's biggest fish importer.
"Our policy of resolute cooperation is yielding results," EU Maritime Affairs Commissioner Maria Damanaki said in a statement.
"Five countries receive today our appreciation for getting serious
on illegal fishing. Unfortunately, I cannot say the same for Sri
Lanka."
The world's No. 2 iron ore miner Rio Tinto said a strong third
quarter and productivity gains led to a 12 percent rise in iron ore
production as price volatility persists in the global market.
Rio Tinto, which competes with Vale and BHP Billiton in the
seaborne-traded iron ore market, confirmed its target of mining
295 million tonnes of the steel-making material in 2014, up from
266 million last year.
From Europe to Australia, smaller, less efficient miners are in
many case struggling to survive, while the mega miners, take a
bigger share of the $130 billion seaborne iron ore market.
Third-quarter iron ore production totaled 76.8 million tonnes, up
from 68.3 million in the same period last year, the company
said. It also marked a 5 percent gain over the second quarter.
3
INSIDE COMMODITIES
October 15, 2014
TOP NEWS (Continued)
Turquoise Hill cuts Oyu Tolgoi 2014 gold, copper output
forecast
Global copper market in deficit in 2014 for 5th year in row ICSG
Turquoise Hill Resources Ltd on Tuesday reduced its 2014 forecasts for gold and copper production at the massive Oyu Tolgoi
copper-gold mine in Mongolia because of delays in mine development in the third quarter.
The miner, which owns some 66 percent of Oyu Tolgoi, said it
now expects the mine to produce between 550,000 and 600,000
ounces of gold in concentrates this year, down from the 600,000
to 700,000 ounces it had forecast in August.
It also reduced its expectation for copper concentrate output to
between 135,000 tonnes and 150,000 tonnes this year, down
from a range of 135,000 tonnes to 160,000 tonnes before.
Turquoise Hill is majority owned by global miner Rio Tinto Plc,
which operates the Oyu Tolgoi mine.
The global copper market will be in deficit for a fifth straight year
in 2014 before switching to a surplus of about 390,000 tonnes
next year, an industry group said on Tuesday.
The International Copper Study Group forecast a deficit of
270,000 tonnes this year as operational failures combined with
delays in the start-up of new mines will lead to lower-thananticipated production growth.
The latest estimate is a reversal of the ICSG's previous forecast
in April that production would outpace demand by about
400,000 tonnes as demand would lag output growth.
At that time, it predicted a surplus as big as 595,000 tonnes due
to increases in output mainly in Asia and Africa.
4
INSIDE COMMODITIES
October 15, 2014
3 month TECHNICAL CHARTS (12 and 50 days Exponential Moving Average)
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NYMEX Crude
ICE BRENT Crude
Spot Gold
Spot Silver
CBOT Corn
CBOT Wheat
(Inside Commodities is compiled by Atiqul Habib in Bangalore)
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